At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Is Hyatt Hotels Corporation (NYSE:H) the right investment to pursue these days? The best stock pickers are betting on the stock. The number of long hedge fund bets rose by 5 in recent months. At the end of this article we will also compare H to other stocks including FactSet Research Systems Inc. (NYSE:FDS), Nordstrom, Inc. (NYSE:JWN), and Domino’s Pizza, Inc. (NYSE:DPZ) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, let’s take a peek at the key action regarding Hyatt Hotels Corporation (NYSE:H).
How have hedgies been trading Hyatt Hotels Corporation (NYSE:H)?
At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a jump of 28% from the second quarter of 2016. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Long Pond Capital, managed by John Khoury, holds the number one position in Hyatt Hotels Corporation (NYSE:H). According to regulatory filings, the fund has a $91.8 million position in the stock, comprising 4.3% of its 13F portfolio. The second most bullish fund manager is Glenhill Advisors, led by Glenn J. Krevlin, holding a $37.7 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish include Howard Guberman’s Gruss Asset Management, Kenneth Mario Garschina’s Mason Capital Management and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Consequently, key money managers were breaking ground themselves. Gotham Asset Management, managed by Joel Greenblatt, initiated the largest position in Hyatt Hotels Corporation (NYSE:H). The fund reportedly had $1.7 million invested in the company at the end of the quarter. Thomas Steyer’s Farallon Capital also initiated a $1.6 million position during the quarter. The other funds with brand new H positions are Ken Griffin’s Citadel Investment Group, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Matthew Tewksbury’s Stevens Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Hyatt Hotels Corporation (NYSE:H) but similarly valued. These stocks are FactSet Research Systems Inc. (NYSE:FDS), Nordstrom, Inc. (NYSE:JWN), Domino’s Pizza, Inc. (NYSE:DPZ), and News Corp (NASDAQ:NWSA). This group of stocks’ market valuations resemble H’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $664 million. That figure was $293 million in H’s case. Domino’s Pizza, Inc. (NYSE:DPZ) and News Corp (NASDAQ:NWSA) are the most popular stocks in this table. On the other hand FactSet Research Systems Inc. (NYSE:FDS) is the least popular one with only 16 bullish hedge fund positions. Hyatt Hotels Corporation (NYSE:H) 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 DPZ might be a better candidate to consider a long position.