Hedge Funds Are Piling Into Physicians Realty Trust (DOC)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Physicians Realty Trust (NYSE:DOC).

Is Physicians Realty Trust (NYSE:DOC) the right investment to pursue these days? The best stock pickers are becoming hopeful. The number of long hedge fund bets inched up by 5 in recent months. Our calculations also showed that DOC 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).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.


Israel Englander of Millennium Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 PayPal alternatives for international payments to identify emerging companies that are likely to deliver 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to go over the new hedge fund action encompassing Physicians Realty Trust (NYSE:DOC).

How are hedge funds trading Physicians Realty Trust (NYSE:DOC)?

Heading into the second quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 45% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DOC over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

The largest stake in Physicians Realty Trust (NYSE:DOC) was held by Citadel Investment Group, which reported holding $64.4 million worth of stock at the end of September. It was followed by Cardinal Capital with a $23.3 million position. Other investors bullish on the company included Balyasny Asset Management, Millennium Management, and D E Shaw. In terms of the portfolio weights assigned to each position Cardinal Capital allocated the biggest weight to Physicians Realty Trust (NYSE:DOC), around 1.14% of its 13F portfolio. Balyasny Asset Management is also relatively very bullish on the stock, designating 0.25 percent of its 13F equity portfolio to DOC.

As aggregate interest increased, key hedge funds have been driving this bullishness. Cardinal Capital, managed by Amy Minella, established the largest position in Physicians Realty Trust (NYSE:DOC). Cardinal Capital had $23.3 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $21.4 million position during the quarter. The other funds with new positions in the stock are Renaissance Technologies, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Greg Eisner’s Engineers Gate Manager.

Let’s now review hedge fund activity in other stocks similar to Physicians Realty Trust (NYSE:DOC). These stocks are Nextera Energy Partners LP (NYSE:NEP), Agree Realty Corporation (NYSE:ADC), Brunswick Corporation (NYSE:BC), and CVB Financial Corp. (NASDAQ:CVBF). This group of stocks’ market valuations are similar to DOC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NEP 21 96521 4
ADC 21 310469 3
BC 23 411459 -13
CVBF 8 40046 -6
Average 18.25 214624 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $215 million. That figure was $134 million in DOC’s case. Brunswick Corporation (NYSE:BC) is the most popular stock in this table. On the other hand CVB Financial Corp. (NASDAQ:CVBF) is the least popular one with only 8 bullish hedge fund positions. Physicians Realty Trust (NYSE:DOC) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on DOC as the stock returned 27.4% during the second quarter and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.