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 Ryman Hospitality Properties, Inc. (NYSE:RHP) and determine whether hedge funds skillfully traded this stock.
Ryman Hospitality Properties, Inc. (NYSE:RHP) shareholders have witnessed a decrease in support from the world’s most elite money managers lately. RHP was in 26 hedge funds’ portfolios at the end of the first quarter of 2020. There were 30 hedge funds in our database with RHP positions at the end of the previous quarter. Our calculations also showed that RHP 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. 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 we are checking out this tiny lithium stock. Keeping this in mind let’s go over the key hedge fund action surrounding Ryman Hospitality Properties, Inc. (NYSE:RHP).
How are hedge funds trading Ryman Hospitality Properties, Inc. (NYSE:RHP)?
At Q1’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RHP over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Ryman Hospitality Properties, Inc. (NYSE:RHP) was held by GAMCO Investors, which reported holding $80.7 million worth of stock at the end of September. It was followed by Eminence Capital with a $65.6 million position. Other investors bullish on the company included Long Pond Capital, Newtyn Management, and Water Street Capital. In terms of the portfolio weights assigned to each position 1060 Capital Management allocated the biggest weight to Ryman Hospitality Properties, Inc. (NYSE:RHP), around 8.99% of its 13F portfolio. Newtyn Management is also relatively very bullish on the stock, designating 5.24 percent of its 13F equity portfolio to RHP.
Seeing as Ryman Hospitality Properties, Inc. (NYSE:RHP) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there were a few fund managers who sold off their full holdings last quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management sold off the biggest stake of all the hedgies watched by Insider Monkey, valued at about $28.5 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund said goodbye to about $10.8 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 4 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Ryman Hospitality Properties, Inc. (NYSE:RHP). These stocks are ESCO Technologies Inc. (NYSE:ESE), South State Corporation (NASDAQ:SSB), Alamos Gold Inc (NYSE:AGI), and Washington Real Estate Investment Trust (NYSE:WRE). This group of stocks’ market values are closest to RHP’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $115 million. That figure was $267 million in RHP’s case. Alamos Gold Inc (NYSE:AGI) is the most popular stock in this table. On the other hand Washington Real Estate Investment Trust (NYSE:WRE) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Ryman Hospitality Properties, Inc. (NYSE:RHP) is more popular among hedge funds. 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 and still beat the market by 15.5 percentage points. Unfortunately RHP wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on RHP were disappointed as the stock returned -3.5% during the second quarter 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.