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Is MPW A Good Stock To Buy Now?

Abigail Fisher
·6 min read

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Medical Properties Trust, Inc. (NYSE:MPW).

Is MPW a good stock to buy now? Medical Properties Trust, Inc. (NYSE:MPW) shareholders have witnessed an increase in support from the world's most elite money managers recently. Medical Properties Trust, Inc. (NYSE:MPW) was in 21 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 23. There were 17 hedge funds in our database with MPW holdings at the end of June. Our calculations also showed that MPW isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

John Overdeck of Two Sigma
John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we're going to analyze the recent hedge fund action surrounding Medical Properties Trust, Inc. (NYSE:MPW).

Do Hedge Funds Think MPW Is A Good Stock To Buy Now?

At Q3's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from one quarter earlier. On the other hand, there were a total of 12 hedge funds with a bullish position in MPW a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Cardinal Capital was the largest shareholder of Medical Properties Trust, Inc. (NYSE:MPW), with a stake worth $88.4 million reported as of the end of September. Trailing Cardinal Capital was Citadel Investment Group, which amassed a stake valued at $56.6 million. Millennium Management, Waterfront Capital Partners, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Waterfront Capital Partners allocated the biggest weight to Medical Properties Trust, Inc. (NYSE:MPW), around 5.41% of its 13F portfolio. Cardinal Capital is also relatively very bullish on the stock, designating 3.69 percent of its 13F equity portfolio to MPW.

Now, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in Medical Properties Trust, Inc. (NYSE:MPW). Balyasny Asset Management had $12.2 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $6 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith's Laurion Capital Management, Minhua Zhang's Weld Capital Management, and Greg Eisner's Engineers Gate Manager.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Medical Properties Trust, Inc. (NYSE:MPW) but similarly valued. We will take a look at Elastic N.V. (NYSE:ESTC), Galapagos NV (NASDAQ:GLPG), Vistra Corp. (NYSE:VST), Quidel Corporation (NASDAQ:QDEL), Bright Horizons Family Solutions Inc (NYSE:BFAM), Carnival Corporation & plc (NYSE:CUK), and Chegg Inc (NYSE:CHGG). All of these stocks' market caps are similar to MPW's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ESTC,36,1457200,-7 GLPG,11,97309,-2 VST,45,1514450,3 QDEL,42,467265,10 BFAM,26,314357,-4 CUK,13,142847,-1 CHGG,42,838532,-3 Average,30.7,690280,-0.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.7 hedge funds with bullish positions and the average amount invested in these stocks was $690 million. That figure was $287 million in MPW's case. Vistra Corp. (NYSE:VST) is the most popular stock in this table. On the other hand Galapagos NV (NASDAQ:GLPG) is the least popular one with only 11 bullish hedge fund positions. Medical Properties Trust, Inc. (NYSE:MPW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MPW is 51.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on MPW as the stock returned 19.5% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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