Should You Buy Chesapeake Lodging Trust (CHSP)?

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: D E Shaw. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Stevens Capital Management).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Chesapeake Lodging Trust (NYSE:CHSP) but similarly valued. These stocks are Rambus Inc. (NASDAQ:RMBS), Actuant Corporation (NYSE:ATU), TeleTech Holdings, Inc. (NASDAQ:TTEC), and Fidelity & Guaranty Life (NYSE:FGL). This group of stocks’ market valuations are closest to CHSP’s market valuation.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $16 million in CHSP’s case. Actuant Corporation (NYSE:ATU) is the most popular stock in this table. On the other hand TeleTech Holdings, Inc. (NASDAQ:TTEC) is the least popular one with only 8 bullish hedge fund positions. Chesapeake Lodging Trust (NYSE:CHSP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ATU might be a better candidate to consider taking a long position in.

Disclosure: None