Hedge Funds Are Selling EPR Properties (EPR)

In this article you are going to find out whether hedge funds think EPR Properties (NYSE:EPR) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is EPR Properties (NYSE:EPR) a good investment now? Prominent investors are taking a bearish view. The number of long hedge fund positions shrunk by 1 lately. Our calculations also showed that EPR 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.

Steven Cohen

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. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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. With all of this in mind let’s go over the latest hedge fund action regarding EPR Properties (NYSE:EPR).

What does smart money think about EPR Properties (NYSE:EPR)?

At Q1’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the fourth quarter of 2019. On the other hand, there were a total of 17 hedge funds with a bullish position in EPR a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Is EPR A Good Stock To Buy?

Among these funds, Nut Tree Capital held the most valuable stake in EPR Properties (NYSE:EPR), which was worth $46 million at the end of the third quarter. On the second spot was Millennium Management which amassed $12.7 million worth of shares. Two Sigma Advisors, Weiss Asset Management, and Nut Tree Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Nut Tree Capital allocated the biggest weight to EPR Properties (NYSE:EPR), around 20.65% of its 13F portfolio. LDR Capital is also relatively very bullish on the stock, designating 10.34 percent of its 13F equity portfolio to EPR.

Due to the fact that EPR Properties (NYSE:EPR) has faced falling interest from the smart money, logic holds that there was a specific group of money managers that slashed their entire stakes by the end of the first quarter. It’s worth mentioning that Andrew Weiss’s Weiss Asset Management cut the biggest position of the 750 funds monitored by Insider Monkey, valued at an estimated $36.5 million in stock. Andrew Weiss’s fund, Weiss Asset Management, also sold off its stock, about $35.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds by the end of the first quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as EPR Properties (NYSE:EPR) but similarly valued. We will take a look at Wyndham Destinations, Inc. (NYSE:WYND), Fulton Financial Corp (NASDAQ:FULT), Eidos Therapeutics, Inc. (NASDAQ:EIDX), and AMTD International Inc. (NYSE:HKIB). This group of stocks’ market values are similar to EPR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WYND 25 200324 -3
FULT 14 12965 0
EIDX 12 271572 -8
HKIB 1 15174 0
Average 13 125009 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $149 million in EPR’s case. Wyndham Destinations, Inc. (NYSE:WYND) is the most popular stock in this table. On the other hand AMTD International Inc. (NYSE:HKIB) is the least popular one with only 1 bullish hedge fund positions. EPR Properties (NYSE:EPR) is not the most popular stock in this group but hedge fund interest is still above 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 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on EPR as the stock returned 61.6% in Q2 (through June 10th) 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.