Is Summit Hotel Properties (INN) A Good Stock To Buy Now?

After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Summit Hotel Properties Inc (NYSE:INN).

Is Summit Hotel Properties (INN) a good stock to buy now? The smart money was in a bullish mood. The number of bullish hedge fund positions advanced by 1 recently. Summit Hotel Properties Inc (NYSE:INN) was in 9 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 16. Our calculations also showed that INN 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.

Today there are a lot of gauges shareholders have at their disposal to analyze their holdings. A duo of the most underrated gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can beat their index-focused peers by a solid amount (see the details here).

Arnaud Ajdler Engine Capital

Arnaud Ajdler of Engine Capital

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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. Keeping this in mind let’s take a peek at the key hedge fund action regarding Summit Hotel Properties Inc (NYSE:INN).

Do Hedge Funds Think INN Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the second quarter of 2020. By comparison, 16 hedge funds held shares or bullish call options in INN a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

The largest stake in Summit Hotel Properties Inc (NYSE:INN) was held by Millennium Management, which reported holding $2.7 million worth of stock at the end of September. It was followed by Hill Winds Capital with a $2.2 million position. Other investors bullish on the company included Renaissance Technologies, Engine Capital, and Forward Management. In terms of the portfolio weights assigned to each position Hill Winds Capital allocated the biggest weight to Summit Hotel Properties Inc (NYSE:INN), around 1.71% of its 13F portfolio. Engine Capital is also relatively very bullish on the stock, dishing out 0.37 percent of its 13F equity portfolio to INN.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Engine Capital, managed by Arnaud Ajdler, assembled the largest position in Summit Hotel Properties Inc (NYSE:INN). Engine Capital had $0.7 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $0.1 million position during the quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Summit Hotel Properties Inc (NYSE:INN) but similarly valued. These stocks are Aerie Pharmaceuticals Inc (NASDAQ:AERI), Golden Ocean Group Ltd (NASDAQ:GOGL), CIRCOR International, Inc. (NYSE:CIR), Humanigen, Inc. (NASDAQ:HGEN), International Money Express, Inc. (NASDAQ:IMXI), Molecular Templates, Inc. (NASDAQ:MTEM), and Endeavour Silver Corp. (NYSE:EXK). All of these stocks’ market caps are similar to INN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AERI 15 96347 -8
GOGL 5 65516 -2
CIR 9 101099 0
HGEN 6 109577 6
IMXI 17 110061 4
MTEM 22 116386 -1
EXK 7 11904 0
Average 11.6 87270 -0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $8 million in INN’s case. Molecular Templates, Inc. (NASDAQ:MTEM) is the most popular stock in this table. On the other hand Golden Ocean Group Ltd (NASDAQ:GOGL) is the least popular one with only 5 bullish hedge fund positions. Summit Hotel Properties Inc (NYSE:INN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for INN is 34.6. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on INN as the stock returned 84% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.