Did Hedge Funds Make The Right Call On Host Hotels and Resorts Inc (HST) ?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Host Hotels and Resorts Inc (NYSE:HST) and determine whether hedge funds skillfully traded this stock.

Is Host Hotels and Resorts Inc (NYSE:HST) a good stock to buy now? The smart money was selling. The number of long hedge fund positions went down by 3 lately. Our calculations also showed that HST isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). HST was in 24 hedge funds’ portfolios at the end of March. There were 27 hedge funds in our database with HST positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most traders, hedge funds are assumed to be underperforming, outdated financial tools of the past. While there are more than 8000 funds trading today, Our researchers choose to focus on the bigwigs of this group, about 850 funds. Most estimates calculate that this group of people watch over the majority of all hedge funds’ total capital, and by tracking their matchless equity investments, Insider Monkey has found several investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Richard Driehaus of Driehaus Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Now let’s take a look at the key hedge fund action encompassing Host Hotels and Resorts Inc (NYSE:HST).

What have hedge funds been doing with Host Hotels and Resorts Inc (NYSE:HST)?

At Q1’s end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in HST over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is HST A Good Stock To Buy?

The largest stake in Host Hotels and Resorts Inc (NYSE:HST) was held by HG Vora Capital Management, which reported holding $38.6 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $21.3 million position. Other investors bullish on the company included Echo Street Capital Management, Point72 Asset Management, and Yost Capital Management. In terms of the portfolio weights assigned to each position Yost Capital Management allocated the biggest weight to Host Hotels and Resorts Inc (NYSE:HST), around 9.65% of its 13F portfolio. Kamunting Street Capital is also relatively very bullish on the stock, setting aside 4.24 percent of its 13F equity portfolio to HST.

Due to the fact that Host Hotels and Resorts Inc (NYSE:HST) has faced declining sentiment from the smart money, we can see that there exists a select few fund managers that elected to cut their positions entirely by the end of the first quarter. It’s worth mentioning that Stuart J. Zimmer’s Zimmer Partners dropped the largest position of the 750 funds tracked by Insider Monkey, totaling close to $60.4 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also said goodbye to its stock, about $10.9 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 3 funds by the end of the first quarter.

Let’s check out hedge fund activity in other stocks similar to Host Hotels and Resorts Inc (NYSE:HST). We will take a look at Mylan Inc. (NASDAQ:MYL), InterContinental Hotels Group PLC (NYSE:IHG), Brookfield Property Partners LP (NYSE:BPY), and Bilibili Inc. (NASDAQ:BILI). All of these stocks’ market caps are closest to HST’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MYL 49 1469905 2
IHG 4 9968 -2
BPY 7 42640 -1
BILI 24 731095 1
Average 21 563402 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $563 million. That figure was $130 million in HST’s case. Mylan Inc. (NASDAQ:MYL) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 4 bullish hedge fund positions. Host Hotels and Resorts Inc (NYSE:HST) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately HST wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on HST were disappointed as the stock returned -2.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.