1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Sydnee Gatewood
Sydnee Gatewood
Articles (3176) 

Barrow, Hanley, Mewhinney & Strauss Cuts Ties With MGM Growth Properties

Firm divests REIT from its portfolio

Investment firm Barrow, Hanley, Mewhinney & Strauss disclosed last week it exited its stake in MGM Growth Properties LLC (NYSE:MGP).

Founded in 1979, the Dallas-based firm says on its website it adheres to “a strict definition of value,” which is exhibited in its equity portfolios through “below-market price-to-earnings ratios, below-market price-to-book ratios, and above-market dividend yields, regardless of market conditions.”

According to GuruFocus Real-Time Picks, a Premium feature, the fund sold its 6.43 million remaining shares of MGM Growth Properties on Dec. 31, impacting the equity portfolio by -0.38%. The stock traded for an average price of $30.10 per share.

Since establishing the position in the second quarter of 2018, GuruFocus estimates the fund has gained 5.18% on the investment.


The Las Vegas-based real estate investment trust, which invests in large-scale destination entertainment and leisure resorts, has a $10.13 billion market cap; its shares closed at $32.32 on Jan. 17 with a price-earnings ratio of 32.98, a price-book ratio of 4.6 and a price-sales ratio of 2.48.

The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.


The REIT reported its third-quarter financial results on Nov. 5, posting earnings of 24 cents per share on $219.8 million in rental revenue.

While GuruFocus did not rate MGM’s financial strength or profitability, it did identify some potential red flags to watch out for. For instance, it is being weighed down by low interest coverage. In addition, the Altman Z-Score of 1.3 warns the company is in financial distress and could be at risk of going bankrupt.

The REIT is also being weighed down by returns on equity and assets that underperform a majority of competitors. Regardless, GuruFocus noted its operating margin outperforms over half of its industry peers and it has a moderate Piotroski F-Score of 6, which indicates business conditions are stable.

NWQ Managers (Trades, Portfolio) is now MGM Growth Properties’ largest guru shareholder with 0.44% of outstanding shares. Ron Baron (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Steven Cohen (Trades, Portfolio) and Caxton Associates (Trades, Portfolio) also have positions in the stock.

Portfolio composition

The firm’s $50.94 billion equity portfolio, which is composed of 313 stocks as of the end of third-quarter 2019, is heavily invested in the industrials and financial services sectors.


Representing 2.42% of the equity portfolio, other real estate stocks Barrow, Hanley, Mewhinney & Strauss has holdings in as of the three months ended Sept. 30 include CoreCivic Inc. (NYSE:CXW), Simon Property Group Inc. (NYSE:SPG), Liberty Property Trust (NYSE:LPT), Boston Properties Inc. (NYSE:BXP), The GEO Group Inc. (NYSE:GEO), Healthpeak Properties Inc. (NYSE:PEAK) and Jones Lang LaSalle Inc. (NYSE:JLL).

See the firm's current portfolio here.

Disclosure: No positions.

Read more here:

 Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

About the author:

Sydnee Gatewood
I am the editorial director at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

Rating: 5.0/5 (1 vote)



Please leave your comment:

Performances of the stocks mentioned by Sydnee Gatewood

User Generated Screeners

pascal.van.garsseHigh FCF-M2
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)