Hedge Funds Are Nibbling On Wyndham Hotels & Resorts, Inc. (WH)

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money 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 (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Wyndham Hotels & Resorts, Inc. (NYSE:WH).

Wyndham Hotels & Resorts, Inc. (NYSE:WH) investors should be aware of an increase in support from the world’s most elite money managers recently. Wyndham Hotels & Resorts, Inc. (NYSE:WH) was in 26 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 44. There were 24 hedge funds in our database with WH positions at the end of the second quarter. Our calculations also showed that WH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s take a peek at the latest hedge fund action encompassing Wyndham Hotels & Resorts, Inc. (NYSE:WH).

Do Hedge Funds Think WH Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the second quarter of 2021. By comparison, 33 hedge funds held shares or bullish call options in WH a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Gates Capital Management was the largest shareholder of Wyndham Hotels & Resorts, Inc. (NYSE:WH), with a stake worth $151.7 million reported as of the end of September. Trailing Gates Capital Management was Citadel Investment Group, which amassed a stake valued at $111.8 million. Impactive Capital, Tremblant Capital, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Impactive Capital allocated the biggest weight to Wyndham Hotels & Resorts, Inc. (NYSE:WH), around 7.9% of its 13F portfolio. DG Capital Management is also relatively very bullish on the stock, setting aside 4.23 percent of its 13F equity portfolio to WH.

As aggregate interest increased, key money managers have been driving this bullishness. Alyeska Investment Group, managed by Anand Parekh, created the biggest position in Wyndham Hotels & Resorts, Inc. (NYSE:WH). Alyeska Investment Group had $44.8 million invested in the company at the end of the quarter. Renaissance Technologies also made a $8.4 million investment in the stock during the quarter. The other funds with brand new WH positions are Paul Tudor Jones’s Tudor Investment Corp, Matthew Crandall Gilman’s Hill Winds Capital, and Donald Sussman’s Paloma Partners.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Wyndham Hotels & Resorts, Inc. (NYSE:WH) but similarly valued. These stocks are Gold Fields Limited (NYSE:GFI), Woodward Inc (NASDAQ:WWD), WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC), Pure Storage, Inc. (NYSE:PSTG), Pinnacle Financial Partners, Inc. (NASDAQ:PNFP), Omega Healthcare Investors Inc (NYSE:OHI), and Janus Henderson Group plc (NYSE:JHG). All of these stocks’ market caps are closest to WH’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.1 hedge funds with bullish positions and the average amount invested in these stocks was $720 million. That figure was $807 million in WH’s case. WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) is the most popular stock in this table. On the other hand Gold Fields Limited (NYSE:GFI) is the least popular one with only 15 bullish hedge fund positions. Wyndham Hotels & Resorts, Inc. (NYSE:WH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WH is 38.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately WH wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WH investors were disappointed as the stock returned 5.8% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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