Is Choice Hotels International, Inc. (CHH) a Good Stock To Buy?

Because Choice Hotels International, Inc. (NYSE:CHH) has faced a declination in interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of funds that elected to cut their full holdings by the end of the third quarter. Interestingly, Ken Heebner’s Capital Growth Management cut the largest position of the 700 funds followed by Insider Monkey, comprising an estimated $9.7 million in stock, and Peter Muller’s PDT Partners was right behind this move, as the fund cut about $1.6 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Choice Hotels International, Inc. (NYSE:CHH) but similarly valued. These stocks are SouFun Holdings Limited (ADR) (NYSE:SFUN), Home Bancshares Inc (NASDAQ:HOMB), Southwest Gas Corporation (NYSE:SWX), and Tenneco Inc (NYSE:TEN). All of these stocks’ market caps are closest to CHH’s market cap.

As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $172 million. That figure was $64 million in CHH’s case. Tenneco Inc (NYSE:TEN) is the most popular stock in this table. On the other hand Southwest Gas Corporation (NYSE:SWX) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Choice Hotels International, Inc. (NYSE:CHH) is as less popular as SWX. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.