Is Morgans Hotel Group Co. (MHGC) A Good Stock To Buy?

Due to the fact that Morgans Hotel Group Co. (NASDAQ:MHGC) has experienced declining sentiment from the smart money, it’s easy to see that there was a specific group of money managers who were dropping their entire stakes in the third quarter. Intriguingly, Vishal Bhutani and Joshua Bederman’s Pyrrho Capital Management dropped the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling close to $2 million in stock, and Steve Pei’s Gratia Capital was right behind this move, as the fund dumped about $1.5 million worth of MHGC shares. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to Morgans Hotel Group Co. (NASDAQ:MHGC). We will take a look at Roundy’s Inc (NYSE:RNDY), Cherry Hill Mortgage Investment Corp (NYSE:CHMI), Envivio Inc (NASDAQ:ENVI), and Ampco-Pittsburgh Corp. (NYSE:AP). All of these stocks’ market caps resemble MHGC’s market cap.

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was significantly higher in the case of MHGC: $29 million at the end of September. Envivio Inc (NASDAQ:ENVI) and Ampco-Pittsburgh Corp. (NYSE:AP) are leading the pack, while Roundy’s Inc (NYSE:RNDY) and Cherry Hill Mortgage Investment Corp (NYSE:CHMI) are the least popular ones with only 6 bullish hedge fund positions. Compared to these stocks Morgans Hotel Group Co. (NASDAQ:MHGC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.