With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter. One of these stocks was RLJ Lodging Trust (NYSE:RLJ).
RLJ Lodging Trust (NYSE:RLJ) investors should be aware of an increase in hedge fund interest in recent months. Our calculations also showed that RLJ isn’t among the 30 most popular stocks among hedge funds.
To most market participants, hedge funds are viewed as slow, outdated financial vehicles of years past. While there are more than 8000 funds with their doors open at present, We hone in on the elite of this group, about 750 funds. Most estimates calculate that this group of people command the lion’s share of the smart money’s total asset base, and by tailing their matchless investments, Insider Monkey has uncovered a few investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by nearly 5 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
Let’s check out the recent hedge fund action regarding RLJ Lodging Trust (NYSE:RLJ).
How have hedgies been trading RLJ Lodging Trust (NYSE:RLJ)?
At the end of the fourth quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards RLJ over the last 14 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management has the number one position in RLJ Lodging Trust (NYSE:RLJ), worth close to $45.6 million, amounting to 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, led by Ken Griffin, holding a $39 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish comprise Jeffrey Furber’s AEW Capital Management, Derek C. Schrier’s Indaba Capital Management and Dmitry Balyasny’s Balyasny Asset Management.
As aggregate interest increased, specific money managers were breaking ground themselves. D E Shaw, managed by D. E. Shaw, initiated the biggest position in RLJ Lodging Trust (NYSE:RLJ). D E Shaw had $1.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new RLJ investors: Minhua Zhang’s Weld Capital Management, Noam Gottesman’s GLG Partners, and Jeffrey Talpins’s Element Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as RLJ Lodging Trust (NYSE:RLJ) but similarly valued. We will take a look at The Timken Company (NYSE:TKR), Tetra Tech, Inc. (NASDAQ:TTEK), Eagle Materials, Inc. (NYSE:EXP), and Mercury General Corporation (NYSE:MCY). All of these stocks’ market caps are closest to RLJ’s market cap.
|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 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $220 million in RLJ’s case. The Timken Company (NYSE:TKR) is the most popular stock in this table. On the other hand Mercury General Corporation (NYSE:MCY) is the least popular one with only 18 bullish hedge fund positions. RLJ Lodging Trust (NYSE:RLJ) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately RLJ wasn’t nearly as popular as these 15 stock and hedge funds that were betting on RLJ were disappointed as the stock returned 11.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.