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Were Hedge Funds Right About Piling Into Global Medical REIT Inc. (GMRE)?

·6 min read

The Insider Monkey team has completed processing the quarterly 13F filings for the March 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 Global Medical REIT Inc. (NYSE:GMRE).

Global Medical REIT Inc. (NYSE:GMRE) investors should pay attention to an increase in hedge fund sentiment of late. Global Medical REIT Inc. (NYSE:GMRE) was in 18 hedge funds' portfolios at the end of March. The all time high for this statistic was previously 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 8 hedge funds in our database with GMRE holdings at the end of December. Our calculations also showed that GMRE isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 115 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.

Peter Rathjens Arrowstreet Capital 394
Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Keeping this in mind let's take a peek at the latest hedge fund action surrounding Global Medical REIT Inc. (NYSE:GMRE).

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

At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 125% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GMRE over the last 23 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is GMRE A Good Stock To Buy?
Is GMRE A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Israel Englander's Millennium Management has the number one position in Global Medical REIT Inc. (NYSE:GMRE), worth close to $8.4 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, which holds a $4.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions consist of Dmitry Balyasny's Balyasny Asset Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Frank Fu's CaaS Capital. In terms of the portfolio weights assigned to each position Toscafund Asset Management allocated the biggest weight to Global Medical REIT Inc. (NYSE:GMRE), around 1.02% of its 13F portfolio. LDR Capital is also relatively very bullish on the stock, setting aside 0.15 percent of its 13F equity portfolio to GMRE.

As industrywide interest jumped, specific money managers have jumped into Global Medical REIT Inc. (NYSE:GMRE) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in Global Medical REIT Inc. (NYSE:GMRE). Balyasny Asset Management had $4.1 million invested in the company at the end of the quarter. Frank Fu's CaaS Capital also made a $3.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Benjamin A. Smith's Laurion Capital Management, Paul Marshall and Ian Wace's Marshall Wace LLP, and Martin Hughes's Toscafund Asset Management.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Global Medical REIT Inc. (NYSE:GMRE) but similarly valued. These stocks are Associated Capital Group, Inc. (NYSE:AC), Merus N.V. (NASDAQ:MRUS), Altabancorp (NASDAQ:ALTA), First Mid Bancshares, Inc. (NASDAQ:FMBH), Harmonic Inc (NASDAQ:HLIT), VBI Vaccines, Inc. (NASDAQ:VBIV), and CAI International Inc (NYSE:CAI). All of these stocks' market caps are similar to GMRE's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AC,4,50493,-1 MRUS,23,283671,9 ALTA,4,27867,-2 FMBH,2,667,-2 HLIT,16,103781,1 VBIV,7,173094,-1 CAI,17,123797,0 Average,10.4,109053,0.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.4 hedge funds with bullish positions and the average amount invested in these stocks was $109 million. That figure was $37 million in GMRE's case. Merus N.V. (NASDAQ:MRUS) is the most popular stock in this table. On the other hand First Mid Bancshares, Inc. (NASDAQ:FMBH) is the least popular one with only 2 bullish hedge fund positions. Global Medical REIT Inc. (NYSE:GMRE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GMRE is 78.1. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Hedge funds were also right about betting on GMRE, though not to the same extent, as the stock returned 20.5% since Q1 (through July 23rd) and outperformed the market as well.

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