Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Physicians Realty Trust (NYSE:DOC)? The smart money sentiment can provide an answer to this question.
Physicians Realty Trust (NYSE:DOC) investors should pay attention to an increase in hedge fund sentiment recently. Physicians Realty Trust (NYSE:DOC) was in 19 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 23. Our calculations also showed that DOC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
David E. Shaw of D.E. Shaw
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 look at the new hedge fund action surrounding Physicians Realty Trust (NYSE:DOC).
Do Hedge Funds Think DOC Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the previous quarter. The graph below displays the number of hedge funds with bullish position in DOC 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.
More specifically, Cardinal Capital was the largest shareholder of Physicians Realty Trust (NYSE:DOC), with a stake worth $25.2 million reported as of the end of March. Trailing Cardinal Capital was Citadel Investment Group, which amassed a stake valued at $23.2 million. Millennium Management, Balyasny Asset Management, and Renaissance Technologies 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 Cardinal Capital allocated the biggest weight to Physicians Realty Trust (NYSE:DOC), around 0.62% of its 13F portfolio. Clough Capital Partners is also relatively very bullish on the stock, setting aside 0.38 percent of its 13F equity portfolio to DOC.
With a general bullishness amongst the heavyweights, key money managers have jumped into Physicians Realty Trust (NYSE:DOC) headfirst. Renaissance Technologies, assembled the largest position in Physicians Realty Trust (NYSE:DOC). Renaissance Technologies had $11.5 million invested in the company at the end of the quarter. Mark Coe’s Intrinsic Edge Capital also initiated a $4.4 million position during the quarter. The following funds were also among the new DOC investors: Michael Gelband’s ExodusPoint Capital, D. E. Shaw’s D E Shaw, and Donald Sussman’s Paloma Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Physicians Realty Trust (NYSE:DOC) but similarly valued. We will take a look at Companhia Energetica Minas Gerais (NYSE:CIG), Commercial Metals Company (NYSE:CMC), Hancock Whitney Corporation (NASDAQ:HWC), MultiPlan Corporation (NYSE:MPLN), LGI Homes Inc (NASDAQ:LGIH), Triton International Limited (NYSE:TRTN), and Vicor Corp (NASDAQ:VICR). This group of stocks’ market caps match DOC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CIG | 13 | 65122 | 1 |
| CMC | 20 | 134704 | -3 |
| HWC | 15 | 114698 | 0 |
| MPLN | 30 | 328984 | 5 |
| LGIH | 16 | 80296 | -7 |
| TRTN | 30 | 264199 | 7 |
| VICR | 20 | 88034 | 2 |
| Average | 20.6 | 153720 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.6 hedge funds with bullish positions and the average amount invested in these stocks was $154 million. That figure was $119 million in DOC’s case. MultiPlan Corporation (NYSE:MPLN) is the most popular stock in this table. On the other hand Companhia Energetica Minas Gerais (NYSE:CIG) is the least popular one with only 13 bullish hedge fund positions. Physicians Realty Trust (NYSE:DOC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DOC is 51.4. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately DOC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); DOC investors were disappointed as the stock returned 6.8% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
