Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Hersha Hospitality Trust (NYSE:HT) has experienced an increase in enthusiasm from smart money of late. There were 8 hedge funds in our database with HT holdings at the end of the previous quarter. At the end of this article we will also compare HT to other stocks including GasLog Partners LP (NYSE:GLOP), istar Inc (NYSE:STAR), and Greenlight Capital Re, Ltd. (NASDAQ:GLRE) 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.
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Keeping this in mind, let’s review the fresh action encompassing Hersha Hospitality Trust (NYSE:HT).
Hedge fund activity in Hersha Hospitality Trust (NYSE:HT)
Heading into the fourth quarter of 2016, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the second quarter of 2016. By comparison, 10 hedge funds held shares or bullish call options in HT heading into this year. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Amy Minella’s Cardinal Capital has the number one position in Hersha Hospitality Trust (NYSE:HT), worth close to $21.1 million, corresponding to 1% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, one of the largest hedge funds in the world, holding a $10.4 million position. Some other peers that are bullish include D E Shaw, and Bernard Horn’s Polaris Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As one would reasonably expect, some big names were breaking ground themselves. Millennium Management, led by Israel Englander initiated the largest position in Hersha Hospitality Trust (NYSE:HT) which had $2.6 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.8 million investment in the stock during the quarter. The only other fund with a new position in the stock is Andrew Weiss’ Weiss Asset Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Hersha Hospitality Trust (NYSE:HT) but similarly valued. These stocks are GasLog Partners LP (NYSE:GLOP), istar Inc (NYSE:STAR), Greenlight Capital Re, Ltd. (NASDAQ:GLRE), and Sandstorm Gold Ltd. (NYSE:SAND). This group of stocks’ market caps match HT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GLOP | 3 | 16597 | 0 |
| STAR | 19 | 184047 | 3 |
| GLRE | 12 | 37158 | 0 |
| SAND | 11 | 25099 | 1 |
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 $66 million. That figure was $41 million in HT’s case. istar Inc (NYSE:STAR) is the most popular stock in this table. On the other hand GasLog Partners LP (NYSE:GLOP) is the least popular one with only 3 bullish hedge fund positions. Hersha Hospitality Trust (NYSE:HT) 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 STAR might be a better candidate to consider taking a long position in.
Disclosure: None
