As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about MGM Growth Properties LLC (NYSE:MGP).
MGM Growth Properties LLC (NYSE:MGP) has seen an increase in hedge fund interest in recent months. MGM Growth Properties LLC (NYSE:MGP) was in 34 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 32. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MGP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. Now let’s check out the key hedge fund action surrounding MGM Growth Properties LLC (NYSE:MGP).
Do Hedge Funds Think MGP Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards MGP over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in MGM Growth Properties LLC (NYSE:MGP), which was worth $114.4 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $111.2 million worth of shares. Governors Lane, D E Shaw, and Waterfront Capital Partners 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 BlueMar Capital Management allocated the biggest weight to MGM Growth Properties LLC (NYSE:MGP), around 6.34% of its 13F portfolio. V3 Capital is also relatively very bullish on the stock, designating 5.54 percent of its 13F equity portfolio to MGP.
Now, key hedge funds have jumped into MGM Growth Properties LLC (NYSE:MGP) headfirst. CaaS Capital, managed by Frank Fu, created the most valuable position in MGM Growth Properties LLC (NYSE:MGP). CaaS Capital had $12.3 million invested in the company at the end of the quarter. Jonathan Litt’s Land & Buildings Investment Management also initiated a $11.2 million position during the quarter. The following funds were also among the new MGP investors: Daniel Johnson’s Gillson Capital, Paul Tudor Jones’s Tudor Investment Corp, and Matthew L Pinz’s Pinz Capital.
Let’s now take a look at hedge fund activity in other stocks similar to MGM Growth Properties LLC (NYSE:MGP). We will take a look at Aspen Technology, Inc. (NASDAQ:AZPN), Paylocity Holding Corp (NASDAQ:PCTY), Paysafe Limited (NYSE:PSFE), Western Alliance Bancorporation (NYSE:WAL), McAfee Corp. (NASDAQ:MCFE), ContextLogic Inc. (NASDAQ:WISH), and Bruker Corporation (NASDAQ:BRKR). All of these stocks’ market caps match MGP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AZPN | 32 | 1158081 | 3 |
| PCTY | 22 | 539146 | -4 |
| PSFE | 41 | 1326259 | 41 |
| WAL | 23 | 141015 | 1 |
| MCFE | 17 | 174841 | -3 |
| WISH | 25 | 297175 | 1 |
| BRKR | 22 | 219602 | -1 |
| Average | 26 | 550874 | 5.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $551 million. That figure was $592 million in MGP’s case. Paysafe Limited (NYSE:PSFE) is the most popular stock in this table. On the other hand McAfee Corp. (NASDAQ:MCFE) is the least popular one with only 17 bullish hedge fund positions. MGM Growth Properties LLC (NYSE:MGP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MGP is 75.4. 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. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on MGP, though not to the same extent, as the stock returned 13.1% since Q1 (through June 25th) and outperformed the market as well.
Follow Mgm Growth Properties Llc (NYSE:MGP)
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Disclosure: None. This article was originally published at Insider Monkey.
