The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Choice Hotels International, Inc. (NYSE:CHH), and what that likely means for the prospects of the company and its stock.
Choice Hotels International, Inc. (NYSE:CHH) has seen a decrease in hedge fund sentiment in recent months. At the end of this article we will also compare CHH to other stocks including SouFun Holdings Limited (ADR) (NYSE:SFUN), Home Bancshares Inc (NASDAQ:HOMB), and Southwest Gas Corporation (NYSE:SWX) to get a better sense of its popularity.
According to most investors, hedge funds are assumed to be underperforming, old financial tools of yesteryear. While there are more than 8000 funds with their doors open today, We choose to focus on the upper echelon of this group, approximately 700 funds. These money managers command the majority of all hedge funds’ total capital, and by shadowing their best picks, Insider Monkey has spotted numerous investment strategies that have historically defeated the market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
With all of this in mind, let’s analyze the key action regarding Choice Hotels International, Inc. (NYSE:CHH).
How have hedgies been trading Choice Hotels International, Inc. (NYSE:CHH)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Greg Poole’s Echo Street Capital Management has the number one position in Choice Hotels International, Inc. (NYSE:CHH), worth close to $21.1 million, corresponding to 0.8% of its total 13F portfolio. The second most bullish fund manager is Ken Griffin of Citadel Investment Group, with a $19.4 million position; less than 0.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions contain Jim Simons’ Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and D E Shaw.