Hedge Funds Are Coming Back To EPR Properties (EPR)

In this article we will analyze whether EPR Properties (NYSE:EPR) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

EPR Properties (NYSE:EPR) investors should be aware of an increase in hedge fund interest in recent months. EPR Properties (NYSE:EPR) was in 20 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 26. Our calculations also showed that EPR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Dmitry Balyasny of Balyasny Asset Managemnet
Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to take a glance at the latest hedge fund action surrounding EPR Properties (NYSE:EPR).

Do Hedge Funds Think EPR Is A Good Stock To Buy Now?

At the end of June, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in EPR a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey's hedge fund database, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital has the number one position in EPR Properties (NYSE:EPR), worth close to $56.4 million, corresponding to 0.1% of its total 13F portfolio. On Arrowstreet Capital's heels is Redwood Capital Management, managed by Jonathan Kolatch, which holds a $46.3 million position; 3% of its 13F portfolio is allocated to the company. Other peers with similar optimism comprise Ken Griffin's Citadel Investment Group, and Jared Nussbaum's Nut Tree Capital. In terms of the portfolio weights assigned to each position Nut Tree Capital allocated the biggest weight to EPR Properties (NYSE:EPR), around 4.36% of its 13F portfolio. Redwood Capital Management is also relatively very bullish on the stock, setting aside 3.02 percent of its 13F equity portfolio to EPR.

As one would reasonably expect, specific money managers were breaking ground themselves. D E Shaw, managed by D. E. Shaw, assembled the most valuable position in EPR Properties (NYSE:EPR). D E Shaw had $19.4 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $9.6 million position during the quarter. The following funds were also among the new EPR investors: Renaissance Technologies, Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, and Steve Cohen's Point72 Asset Management.

Let's also examine hedge fund activity in other stocks similar to EPR Properties (NYSE:EPR). These stocks are F.N.B. Corp (NYSE:FNB), Alkermes Plc (NASDAQ:ALKS), Option Care Health, Inc. (NASDAQ:OPCH), Sabra Health Care REIT Inc (NASDAQ:SBRA), Glaukos Corporation (NYSE:GKOS), Arconic Corporation (NYSE:ARNC), and Korn Ferry (NYSE:KFY). This group of stocks' market values resemble EPR's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FNB,16,55892,0 ALKS,36,897660,5 OPCH,31,342676,0 SBRA,14,100037,-7 GKOS,19,51490,1 ARNC,30,1000061,4 KFY,21,247721,5 Average,23.9,385077,1.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $385 million. That figure was $231 million in EPR's case. Alkermes Plc (NASDAQ:ALKS) is the most popular stock in this table. On the other hand Sabra Health Care REIT Inc (NASDAQ:SBRA) is the least popular one with only 14 bullish hedge fund positions. EPR Properties (NYSE:EPR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EPR is 46.7. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately EPR wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); EPR investors were disappointed as the stock returned -0.8% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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

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