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 first 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 4.5 years and analyze what the smart money thinks of MGM Growth Properties LLC (NYSE:MGP) based on that data.
Is MGM Growth Properties LLC (NYSE:MGP) an exceptional investment today? Hedge funds are getting less optimistic. The number of long hedge fund positions retreated by 1 lately. Our calculations also showed that MGP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). MGP was in 28 hedge funds’ portfolios at the end of the first quarter of 2020. There were 29 hedge funds in our database with MGP holdings at the end of the previous quarter.
Video: 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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny lithium play. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s check out the recent hedge fund action surrounding MGM Growth Properties LLC (NYSE:MGP).
How are hedge funds trading MGM Growth Properties LLC (NYSE:MGP)?
At Q1’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the previous quarter. By comparison, 17 hedge funds held shares or bullish call options in MGP a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Stuart J. Zimmer’s Zimmer Partners has the largest position in MGM Growth Properties LLC (NYSE:MGP), worth close to $137.9 million, accounting for 3.1% of its total 13F portfolio. Coming in second is Citadel Investment Group, led by Ken Griffin, holding a $79.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions consist of Steve Cohen’s Point72 Asset Management, Clifton S. Robbins’s Blue Harbour Group and David Brown’s Hawk Ridge Management. In terms of the portfolio weights assigned to each position 1060 Capital Management allocated the biggest weight to MGM Growth Properties LLC (NYSE:MGP), around 12.63% of its 13F portfolio. Mountaineer Partners Management is also relatively very bullish on the stock, designating 9.85 percent of its 13F equity portfolio to MGP.
Due to the fact that MGM Growth Properties LLC (NYSE:MGP) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedgies that slashed their entire stakes last quarter. Intriguingly, Renaissance Technologies cut the largest investment of all the hedgies followed by Insider Monkey, totaling close to $38.9 million in stock. Charles Davidson and Joseph Jacobs’s fund, Wexford Capital, also dropped its stock, about $24 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to MGM Growth Properties LLC (NYSE:MGP). These stocks are MongoDB, Inc. (NASDAQ:MDB), United Airlines Holdings Inc (NYSE:UAL), VICI Properties Inc. (NYSE:VICI), and SVB Financial Group (NASDAQ:SIVB). This group of stocks’ market caps are closest to MGP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MDB | 30 | 770189 | -2 |
| UAL | 41 | 1908897 | -21 |
| VICI | 36 | 921752 | -1 |
| SIVB | 30 | 383904 | -5 |
| Average | 34.25 | 996186 | -7.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.25 hedge funds with bullish positions and the average amount invested in these stocks was $996 million. That figure was $547 million in MGP’s case. United Airlines Holdings Inc (NYSE:UAL) is the most popular stock in this table. On the other hand MongoDB, Inc. (NASDAQ:MDB) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks MGM Growth Properties LLC (NYSE:MGP) is even less popular than MDB. Hedge funds dodged a bullet by taking a bearish stance towards MGP. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately MGP wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); MGP investors were disappointed as the stock returned 17.2% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
