We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Medical Properties Trust, Inc. (NYSE:MPW) based on that data.
Is Medical Properties Trust, Inc. (NYSE:MPW) ready to rally soon? The best stock pickers are getting more bullish. The number of bullish hedge fund positions rose by 2 lately. Our calculations also showed that MPW isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). MPW was in 14 hedge funds’ portfolios at the end of December. There were 12 hedge funds in our database with MPW positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 more than 41 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s view the latest hedge fund action regarding Medical Properties Trust, Inc. (NYSE:MPW).
Hedge fund activity in Medical Properties Trust, Inc. (NYSE:MPW)
At Q4’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in MPW a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
The largest stake in Medical Properties Trust, Inc. (NYSE:MPW) was held by Cardinal Capital, which reported holding $144.9 million worth of stock at the end of September. It was followed by Waterfront Capital Partners with a $14.7 million position. Other investors bullish on the company included Millennium Management, PEAK6 Capital Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Cardinal Capital allocated the biggest weight to Medical Properties Trust, Inc. (NYSE:MPW), around 4.42% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, setting aside 2.23 percent of its 13F equity portfolio to MPW.
Now, specific money managers have jumped into Medical Properties Trust, Inc. (NYSE:MPW) headfirst. Millennium Management, managed by Israel Englander, created the largest position in Medical Properties Trust, Inc. (NYSE:MPW). Millennium Management had $11.3 million invested in the company at the end of the quarter. Mark Coe’s Intrinsic Edge Capital also initiated a $3.8 million position during the quarter. The other funds with new positions in the stock are Matthew Tewksbury’s Stevens Capital Management, Mika Toikka’s AlphaCrest Capital Management, and Ran Pang’s Quantamental Technologies.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Medical Properties Trust, Inc. (NYSE:MPW) but similarly valued. These stocks are Marathon Oil Corporation (NYSE:MRO), Rollins, Inc. (NYSE:ROL), Fair Isaac Corporation (NYSE:FICO), and Aramark (NYSE:ARMK). All of these stocks’ market caps resemble MPW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MRO | 30 | 448735 | -7 |
| ROL | 34 | 363525 | 5 |
| FICO | 45 | 1456753 | 1 |
| ARMK | 36 | 2127604 | 1 |
| Average | 36.25 | 1099154 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.25 hedge funds with bullish positions and the average amount invested in these stocks was $1099 million. That figure was $186 million in MPW’s case. Fair Isaac Corporation (NYSE:FICO) is the most popular stock in this table. On the other hand Marathon Oil Corporation (NYSE:MRO) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks Medical Properties Trust, Inc. (NYSE:MPW) is even less popular than MRO. Hedge funds dodged a bullet by taking a bearish stance towards MPW. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but managed to beat the market by 3.2 percentage points. Unfortunately MPW wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MPW investors were disappointed as the stock returned -34.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1.
Disclosure: None. This article was originally published at Insider Monkey.
