What Do Hedge Funds Think of Hospitality Properties Trust (HPT)?

While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, the low commodity prices and the economic turmoil in China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Hospitality Properties Trust (NYSE:HPT).

Hospitality Properties Trust (NYSE:HPT) investors should be aware of an increase in activity from the world’s largest hedge funds recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Graco Inc. (NYSE:GGG), NCR Corporation (NYSE:NCR), and Molina Healthcare, Inc. (NYSE:MOH) to gather more data points.

To most stock holders, hedge funds are viewed as underperforming, outdated financial tools of years past. While there are more than 8000 funds trading today, Our researchers choose to focus on the upper echelon of this group, around 700 funds. These money managers watch over the lion’s share of all hedge funds’ total capital, and by tracking their first-class investments, Insider Monkey has deciphered a few investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, let’s take a look at the new action surrounding Hospitality Properties Trust (NYSE:HPT).

Hedge fund activity in Hospitality Properties Trust (NYSE:HPT)

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the second quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Greg Poole’s Echo Street Capital Management has the most valuable position in Hospitality Properties Trust (NYSE:HPT), worth close to $19.9 million, amounting to 0.7% of its total 13F portfolio. On Echo Street Capital Management’s heels is Pzena Investment Management, managed by Richard S. Pzena, which holds a $15 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions comprise Jim Simons’s Renaissance Technologies, and John Overdeck and David Siegel’s Two Sigma Advisors.

Consequently, some big names have jumped into Hospitality Properties Trust (NYSE:HPT) headfirst. Renaissance Technologies, managed by Jim Simons, assembled the most valuable position in Hospitality Properties Trust (NYSE:HPT). Renaissance Technologies had $9.3 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $6.4 million investment in the stock during the quarter. The following funds were also among the new HPT investors: David Costen Haley’s HBK Investments and Jacob Gottlieb’s Visium Asset Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Hospitality Properties Trust (NYSE:HPT) but similarly valued. We will take a look at Graco Inc. (NYSE:GGG), NCR Corporation (NYSE:NCR), Molina Healthcare, Inc. (NYSE:MOH), and AmeriGas Partners, L.P. (NYSE:APU). This group of stocks’ market caps are closest to HPT’s market cap.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $408 million. That figure was $78 million in HPT’s case. NCR Corporation (NYSE:NCR) is the most popular stock in this table. On the other hand AmeriGas Partners, L.P. (NYSE:APU) is the least popular one with only 8 bullish hedge fund positions. Hospitality Properties Trust (NYSE:HPT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NCR might be a better candidate to consider a long position.