DiamondRock Hospitality Company (DRH): Are Hedge Funds Right About This Stock?

Since DiamondRock Hospitality Company (NYSE:DRH) has sustained bearish sentiment from the smart money, we can see that there lies a certain “tier” of fund managers that elected to cut their positions entirely by the end of the third quarter. Interestingly, Eduardo Abush’s Waterfront Capital Partners said goodbye to the biggest stake of all the investors followed by Insider Monkey, comprising close to $9.7 million in stock. Ken Griffin’s fund, Citadel Investment Group, also said goodbye to its stock, about $8.8 million worth of DRH shares.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as DiamondRock Hospitality Company (NYSE:DRH) but similarly valued. We will take a look at KapStone Paper and Packaging Corp. (NYSE:KS), Applied Industrial Technologies (NYSE:AIT), IAMGOLD Corporation (USA) (NYSE:IAG), and West Corp (NASDAQ:WSTC). This group of stocks’ market values are similar to DRH’s market value.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $50 million in DRH’s case. KapStone Paper and Packaging Corp. (NYSE:KS) is the most popular stock in this table. On the other hand Applied Industrial Technologies (NYSE:AIT) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks DiamondRock Hospitality Company (NYSE:DRH) is even less popular than AIT. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: none.