Is MGP Stock A Buy?
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 5 years and analyze what the smart money thinks of MGM Growth Properties LLC (NYSE:MGP) based on that data.
Is MGP stock a buy? MGM Growth Properties LLC (NYSE:MGP) was in 29 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 32. MGP has seen a decrease in activity from the world's largest hedge funds lately. There were 30 hedge funds in our database with MGP holdings at the end of September. Our calculations also showed that MGP isn't among the 30 most popular stocks among hedge funds (click for Q4 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 124 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jeffrey Altman of Owl Creek Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Now let's review the new hedge fund action surrounding MGM Growth Properties LLC (NYSE:MGP).
Do Hedge Funds Think MGP Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in MGP a year ago. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the number one position in MGM Growth Properties LLC (NYSE:MGP). Citadel Investment Group has a $141.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is HG Vora Capital Management, managed by Parag Vora, which holds a $47 million position; 3.6% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions contain Isaac Corre's Governors Lane, Jeffrey Altman's Owl Creek Asset Management and D. E. Shaw's D E Shaw. 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 6.74% of its 13F portfolio. Mountaineer Partners Management is also relatively very bullish on the stock, earmarking 6.11 percent of its 13F equity portfolio to MGP.
Since MGM Growth Properties LLC (NYSE:MGP) has faced a decline in interest from hedge fund managers, we can see that there were a few hedgies who were dropping their positions entirely heading into Q1. At the top of the heap, David Brown's Hawk Ridge Management dropped the biggest stake of the "upper crust" of funds followed by Insider Monkey, totaling about $3.9 million in stock. Paul Tudor Jones's fund, Tudor Investment Corp, also dumped its stock, about $3.1 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds heading into Q1.
Let's go over hedge fund activity in other stocks similar to MGM Growth Properties LLC (NYSE:MGP). We will take a look at Kingsoft Cloud Holdings Limited (NASDAQ:KC), American Homes 4 Rent (NYSE:AMH), Magellan Midstream Partners, L.P. (NYSE:MMP), BorgWarner Inc. (NYSE:BWA), Tenaris S.A. (NYSE:TS), AngloGold Ashanti Limited (NYSE:AU), and Everest Re Group Ltd (NYSE:RE). This group of stocks' market valuations match MGP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KC,20,189726,-9 AMH,27,503512,3 MMP,22,146290,2 BWA,27,644895,-3 TS,12,261571,0 AU,17,458467,0 RE,29,475245,-7 Average,22,382815,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $383 million. That figure was $525 million in MGP's case. Everest Re Group Ltd (NYSE:RE) is the most popular stock in this table. On the other hand Tenaris S.A. (NYSE:TS) is the least popular one with only 12 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 81.2. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on MGP as the stock returned 12.6% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
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