Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: MGM Growth Properties LLC (NYSE:MGP).
Is MGM Growth Properties LLC (NYSE:MGP) an attractive investment today? It looks like prominent investors are taking an optimistic view. More specifically, the number of funds from our database long the stock inched up by one during the third quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Smith & Wesson Holding Corporation (NASDAQ:SWHC), TASER International, Inc. (NASDAQ:TASR), and United Community Banks Inc (NASDAQ:UCBI) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Now, let’s take a glance at the recent action regarding MGM Growth Properties LLC (NYSE:MGP).
Hedge fund activity in MGM Growth Properties LLC (NYSE:MGP)
At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, up by 4% over the quarter. Below, you can check out the change in hedge fund sentiment towards MGP over the last five quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Anand Parekh’s Alyeska Investment Group holds the number one position in MGM Growth Properties LLC (NYSE:MGP) which has a $68.9 million position in the stock. Coming in second is Stuart J. Zimmer’s Zimmer Partners which holds a $46.3 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain Jacob Doft’s Highline Capital Management, Ken Griffin’s Citadel Investment Group and Bain Capital’s Brookside Capital. We should note that Zimmer Partners is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, some big names have jumped into MGM Growth Properties LLC (NYSE:MGP) headfirst. Caxton Associates LP, led by Bruce Kovner, established the most valuable position in MGM Growth Properties LLC (NYSE:MGP) . Caxton Associates LP had $13.4 million invested in the company at the end of the quarter. Greg Poole’s Echo Street Capital Management also made a $7.2 million investment in the stock during the quarter. The other funds with brand new MGP positions are Philip Hempleman’s Ardsley Partners, Solomon Kumin’s Folger Hill Asset Management, and Drew Cupps’ Cupps Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as MGM Growth Properties LLC (NYSE:MGP) but similarly valued. These stocks are Smith & Wesson Holding Corporation (NASDAQ:SWHC), TASER International, Inc. (NASDAQ:TASR), United Community Banks Inc (NASDAQ:UCBI), and Five Prime Therapeutics Inc (NASDAQ:FPRX). 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 |
|---|---|---|---|
| SWHC | 22 | 161413 | 2 |
| TASR | 12 | 49132 | 2 |
| UCBI | 12 | 106217 | -7 |
| FPRX | 20 | 216553 | -2 |
As you can see these stocks had an average of 16 funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $373 million in MGP’s case. Smith & Wesson Holding Corporation (NASDAQ:SWHC) is the most popular stock in this table. On the other hand TASER International, Inc. (NASDAQ:TASR) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks MGM Growth Properties LLC (NYSE:MGP) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
