We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Ashford Hospitality Trust, Inc. (NYSE:AHT).
Hedge fund interest in Ashford Hospitality Trust, Inc. (NYSE:AHT) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Secoo Holding Limited (NASDAQ:SECO), Cadiz Inc (NASDAQ:CDZI), and Harpoon Therapeutics, Inc. (NASDAQ:HARP) to gather more data points. Our calculations also showed that AHT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Michael Platt of BlueCrest Capital Mgmt.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the latest hedge fund action regarding Ashford Hospitality Trust, Inc. (NYSE:AHT).
What have hedge funds been doing with Ashford Hospitality Trust, Inc. (NYSE:AHT)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in AHT a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the most valuable position in Ashford Hospitality Trust, Inc. (NYSE:AHT), worth close to $21 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which holds a $2.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers with similar optimism encompass Cliff Asness’s AQR Capital Management, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Snow Park Capital Partners allocated the biggest weight to Ashford Hospitality Trust, Inc. (NYSE:AHT), around 9.11% of its 13F portfolio. Highland Capital Management is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to AHT.
Since Ashford Hospitality Trust, Inc. (NYSE:AHT) has experienced declining sentiment from the smart money, logic holds that there is a sect of money managers that slashed their entire stakes heading into Q4. Intriguingly, David E. Shaw’s D E Shaw sold off the largest position of all the hedgies watched by Insider Monkey, valued at close to $0 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also cut its stock, about $0 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to Ashford Hospitality Trust, Inc. (NYSE:AHT). These stocks are Secoo Holding Limited (NASDAQ:SECO), Cadiz Inc (NASDAQ:CDZI), Harpoon Therapeutics, Inc. (NASDAQ:HARP), and Peoples Financial Services Corp. (NASDAQ:PFIS). This group of stocks’ market valuations resemble AHT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SECO | 4 | 19683 | -3 |
| CDZI | 5 | 44191 | -4 |
| HARP | 8 | 69242 | 2 |
| PFIS | 1 | 3156 | 0 |
| Average | 4.5 | 34068 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $30 million in AHT’s case. Harpoon Therapeutics, Inc. (NASDAQ:HARP) is the most popular stock in this table. On the other hand Peoples Financial Services Corp. (NASDAQ:PFIS) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Ashford Hospitality Trust, Inc. (NYSE:AHT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately AHT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AHT were disappointed as the stock returned -15.9% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
