Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Ryman Hospitality Properties, Inc. (NYSE:RHP) in this article.
Ryman Hospitality Properties, Inc. (NYSE:RHP) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds’ portfolios at the end of the first quarter of 2019. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Taro Pharmaceutical Industries Ltd. (NYSE:TARO), The Goodyear Tire & Rubber Company (NASDAQ:GT), and TriNet Group Inc (NYSE:TNET) to gather more data points.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to analyze the key hedge fund action encompassing Ryman Hospitality Properties, Inc. (NYSE:RHP).
How are hedge funds trading Ryman Hospitality Properties, Inc. (NYSE:RHP)?
Heading into the second quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2018. On the other hand, there were a total of 19 hedge funds with a bullish position in RHP a year ago. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Among these funds, GAMCO Investors held the most valuable stake in Ryman Hospitality Properties, Inc. (NYSE:RHP), which was worth $221.3 million at the end of the first quarter. On the second spot was Millennium Management which amassed $72.3 million worth of shares. Moreover, Renaissance Technologies, Water Street Capital, and GLG Partners were also bullish on Ryman Hospitality Properties, Inc. (NYSE:RHP), allocating a large percentage of their portfolios to this stock.
Seeing as Ryman Hospitality Properties, Inc. (NYSE:RHP) has faced bearish sentiment from the smart money, it’s safe to say that there was a specific group of hedgies that elected to cut their full holdings last quarter. Interestingly, Stuart J. Zimmer’s Zimmer Partners sold off the biggest position of all the hedgies monitored by Insider Monkey, worth about $14.7 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dumped about $1.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Ryman Hospitality Properties, Inc. (NYSE:RHP) but similarly valued. These stocks are Taro Pharmaceutical Industries Ltd. (NYSE:TARO), The Goodyear Tire & Rubber Company (NASDAQ:GT), TriNet Group Inc (NYSE:TNET), and Commscope Holding Company Inc (NASDAQ:COMM). This group of stocks’ market caps are closest to RHP’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 19 hedge funds with bullish positions and the average amount invested in these stocks was $491 million. That figure was $477 million in RHP’s case. TriNet Group Inc (NYSE:TNET) is the most popular stock in this table. On the other hand Taro Pharmaceutical Industries Ltd. (NYSE:TARO) is the least popular one with only 10 bullish hedge fund positions. Ryman Hospitality Properties, Inc. (NYSE:RHP) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately RHP wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); RHP investors were disappointed as the stock returned -1.6% 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.