How Recent IPO Global Medical REIT Inc (GMRE) Stacks Up Against Its Peers

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Global Medical REIT Inc (NYSE:GMRE).

Hedge fund interest in Global Medical REIT Inc (NYSE:GMRE) shares was flat during the third quarter. This is usually a negative indicator. 22 hedge funds that we track owned the stock on September 30, same as on June 30. At the end of this article we will also compare GMRE to other stocks including TriplePoint Venture Growth BDC Corp (NYSE:TPVG), Consolidated Water Co. Ltd. (NASDAQ:CWCO), and KCAP Financial Inc (NASDAQ:KCAP) to get a better sense of its popularity.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

What does the smart money think about Global Medical REIT Inc (NYSE:GMRE)?

At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter, as it appears the funds who wanted the stock were all in on it immediately upon its late-June IPO.  With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Clough Capital Partners, led by Charles Clough, holds the most valuable position in Global Medical REIT Inc (NYSE:GMRE). Clough Capital Partners has a $6.1 million position in the stock. The second most bullish fund manager is Ardsley Partners, led by Philip Hempleman, holding a $2.3 million position. Remaining hedge funds and institutional investors with similar optimism comprise David M. Knott’s Dorset Management, D E Shaw, one of the biggest hedge funds in the world, and Bruce Silver’s Silver Capital Management. We should note that Dorset Management is among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

Since Global Medical REIT Inc (NYSE:GMRE) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of money managers that slashed their full holdings by the end of the third quarter. Interestingly, Michael Thompson’s BHR Capital cashed in the largest stake of the 700 funds followed by Insider Monkey, comprising close to $1 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund dumped about $0.9 million worth of shares.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Global Medical REIT Inc (NYSE:GMRE) but similarly valued. We will take a look at TriplePoint Venture Growth BDC Corp (NYSE:TPVG), Consolidated Water Co. Ltd. (NASDAQ:CWCO), KCAP Financial Inc (NASDAQ:KCAP), and Osiris Therapeutics, Inc. (NASDAQ:OSIR). This group of stocks’ market valuations resemble GMRE’s market valuation.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $10 million in GMRE’s case. Osiris Therapeutics, Inc. (NASDAQ:OSIR) is the most popular stock in this table. On the other hand Consolidated Water Co. Ltd. (NASDAQ:CWCO) is the least popular one with only 3 bullish hedge fund positions. Global Medical REIT Inc (NYSE:GMRE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard OSIR might be a better candidate to consider taking a long position in.

Disclosure: None