Ashford Investment Management is the securities investment division of real estate-focused asset management firm Ashford Inc (NYSEMKT:AINC). The Texas-based fund is currently headed by Rob Hay, who apart from being Ashford Investment Management’s Chief Investment Officer (CIO) also serves as the Chief Strategy Officer at Ashford Inc. Mr. Hay holds an A.B. in politics from Princeton University and prior to joining Ashford Inc. worked at Merrill Lynch. Ashford Investment Management runs industry-focused strategies centered on equities from the real estate, hospitality and leisure space. The strategies run by the firm target annualized volatility in the range of 10-15%, whereas stocks from the sector, in which it invests, historically have a 20% to 30% volatility. Ashford Investment Management recently filed its first 13F with the Securities and Exchange Commission (SEC), revealing a US equity portfolio worth $164.6 million as of the end of December. In this post, we will look closely at the fund’s top stock picks going into 2016.
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#5 Host Hotels and Resorts Inc (NYSE:HST)
– Shares Owned by Ashford Investment Management (as of December 31): 337,400
– Value of Holding (as of December 31): $5.17 million
Shares of Host Hotels and Resorts Inc (NYSE:HST) declined throughout 2015, ending the year more than 30% in the red. Though they continued this decline in the first few weeks of 2016, they recently have changed their trajectory and now are trading flat for the year. However, the stock’s dividend yield is still attractive at 5.17%. On February 7, the REIT reported its fourth-quarter results, declaring EPS of $0.39, versus analysts’ estimates of $0.33, while the revenue was in-line with expectations at $1.33 billion. Despite the earnings beat, on February 18, analysts at SunTrust lowered their target price on the stock to $16 from $19, but kept the rating at ‘Neutral’. Jeffrey Furber‘s AEW Capital Management inched down its stake in the company by 5% to 6.3 million shares during the fourth quarter.
#4 Toll Brothers Inc (NYSE:TOL)
– Shares Owned by Ashford Investment Management (as of December 31): 166,800
– Value of Holding (as of December 31): $5.55 million
Due to the labor shortage, higher costs and weakness in credit markets, property developer Toll Brothers Inc (NYSE:TOL) has lost one-fourth of its value so far this year. The company is scheduled to report its fiscal 2016 first quarter results next week and analysts are expecting EPS of $0.43 on revenue of $950.88 million. For the first quarter of fiscal 2015, the company posted EPS of $0.44 on revenue of $853.30 million. On January 25, analysts at Raymond James upgraded the stock to ‘Strong Buy’ from ‘Outperform’ with a price target of $40, which represents a potential upside of over 60%. Ken Griffin‘s Citadel Investment Group more than halved its stake in Toll Brothers Inc (NYSE:TOL) to over 1.68 million shares during the October-December period.
#3 Diamond Resorts International Inc (NYSE:DRII)
– Shares Owned by Ashford Investment Management (as of December 31): 251,400
– Value of Holding (as of December 31): $6.41 million
Diamond Resorts International Inc (NYSE:DRII) is another company in Ashford Investment Management’s equity portfolio, whose stock has slid by around 25% year-to-date. Most of the losses the stock has witnessed this year came after the company was featured in an article in the New York Times on January 22, which revealed how the company uses high-pressure tactics on consumers to seal the deal. However, on January 25, Diamond Resorts International Inc (NYSE:DRII) refuted the allegations in an e-mail to investors, adding that it follows industry practices and enjoys high customer ratings from its clients. On February 4, analysts at Credit Suisse initiated coverage on the stock with an ‘Outperform’ rating and $25 price target. Matthew Halbower‘s Pentwater Capital Management cut its stake in the company by 28% to 1.92 million shares during the fourth quarter.