Is Summit Hotel Properties Inc (INN) Going to Burn These Hedge Funds?

Because Summit Hotel Properties Inc (NYSE:INN) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there were a few fund managers that decided to sell off their entire stakes by the end of the third quarter. Intriguingly, Israel Englander’s Millennium Management sold off the largest investment of all the hedgies tracked by Insider Monkey, totaling an estimated $6.3 million in stock. Millennium Management Subsidiary’s fund, Decade Capital Management, also dropped its holding, about $1.9 million worth of INN shares. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Summit Hotel Properties Inc (NYSE:INN) but similarly valued. We will take a look at NxStage Medical, Inc. (NASDAQ:NXTM), Banner Corporation (NASDAQ:BANR) and Cooper-Standard Holdings Inc (NYSE:CPS). This group of stocks’ market valuations are similar to INN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NXTM 20 209625 -10
BANR 17 100374 5
CPS 14 380291 -3

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $230 million. That figure was $42 million in INN’s case. NxStage Medical, Inc. (NASDAQ:NXTM) is the most popular stock in this table, with 20 funds betting on it, while Cooper-Standard Holdings Inc (NYSE:CPS) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Summit Hotel Properties Inc (NYSE:INN) is even less popular than CPS. 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.