In this article we will analyze whether GreenTree Hospitality Group Ltd. (NYSE:GHG) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is GreenTree Hospitality Group (GHG) a good stock to buy now? GHG has experienced an increase in activity from the world’s largest hedge funds in recent months. GreenTree Hospitality Group Ltd. (NYSE:GHG) was in 7 hedge funds’ portfolios at the end of September. The all time high for this statistics is 14. There were 5 hedge funds in our database with GHG positions at the end of the second quarter. Our calculations also showed that GHG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are many methods market participants have at their disposal to size up their holdings. A duo of the most under-the-radar methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the market by a superb amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to view the fresh hedge fund action regarding GreenTree Hospitality Group Ltd. (NYSE:GHG).
Hedge fund activity in GreenTree Hospitality Group Ltd. (NYSE:GHG)
Heading into the fourth quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in GHG a year ago. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of GreenTree Hospitality Group Ltd. (NYSE:GHG), with a stake worth $8.8 million reported as of the end of September. Trailing Renaissance Technologies was Guardian Point Capital, which amassed a stake valued at $5.4 million. Dalton Investments, Millennium Management, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Dalton Investments allocated the biggest weight to GreenTree Hospitality Group Ltd. (NYSE:GHG), around 2.4% of its 13F portfolio. Guardian Point Capital is also relatively very bullish on the stock, designating 1.88 percent of its 13F equity portfolio to GHG.
Consequently, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, established the largest position in GreenTree Hospitality Group Ltd. (NYSE:GHG). Millennium Management had $0.8 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) and Bruce Kovner’s Caxton Associates LP.
Let’s go over hedge fund activity in other stocks similar to GreenTree Hospitality Group Ltd. (NYSE:GHG). These stocks are Northwest Natural Holding Company (NYSE:NWN), Belden Inc. (NYSE:BDC), Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), PROS Holdings, Inc. (NYSE:PRO), Super Micro Computer, Inc. (NASDAQ:SMCI), Kontoor Brands, Inc. (NYSE:KTB), and Horace Mann Educators Corporation (NYSE:HMN). This group of stocks’ market valuations match GHG’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 17.6 hedge funds with bullish positions and the average amount invested in these stocks was $149 million. That figure was $19 million in GHG’s case. Kulicke and Soffa Industries Inc. (NASDAQ:KLIC) is the most popular stock in this table. On the other hand Horace Mann Educators Corporation (NYSE:HMN) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks GreenTree Hospitality Group Ltd. (NYSE:GHG) is even less popular than HMN. Our overall hedge fund sentiment score for GHG is 22. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds dodged a bullet by taking a bearish stance towards GHG. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd but managed to beat the market again by 16 percentage points. Unfortunately GHG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); GHG investors were disappointed as the stock returned -11.3% since the end of the third quarter (through 12/2) 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 most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.