The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 752 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article we look at what those investors think of CorePoint Lodging Inc. (NYSE:CPLG).
Is CorePoint Lodging Inc. (NYSE:CPLG) a good investment right now? The smart money is taking a bullish view. The number of bullish hedge fund positions improved by 2 recently. Our calculations also showed that CPLG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let’s take a glance at the key hedge fund action regarding CorePoint Lodging Inc. (NYSE:CPLG).
Hedge fund activity in CorePoint Lodging Inc. (NYSE:CPLG)
Heading into the fourth quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. By comparison, 23 hedge funds held shares or bullish call options in CPLG a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in CorePoint Lodging Inc. (NYSE:CPLG) was held by Newtyn Management, which reported holding $13.1 million worth of stock at the end of September. It was followed by Solas Capital Management with a $4.8 million position. Other investors bullish on the company included Arrowstreet Capital, Renaissance Technologies, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Solas Capital Management allocated the biggest weight to CorePoint Lodging Inc. (NYSE:CPLG), around 4.97% of its 13F portfolio. Newtyn Management is also relatively very bullish on the stock, designating 1.23 percent of its 13F equity portfolio to CPLG.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Newtyn Management, managed by Noah Levy and Eugene Dozortsev, assembled the most outsized position in CorePoint Lodging Inc. (NYSE:CPLG). Newtyn Management had $13.1 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $4.5 million investment in the stock during the quarter.
Let’s go over hedge fund activity in other stocks similar to CorePoint Lodging Inc. (NYSE:CPLG). We will take a look at MeiraGTx Holdings plc (NASDAQ:MGTX), National Energy Services Reunited Corp. (NASDAQ:NESR), CryoPort, Inc. (NASDAQ:CYRX), and Hanmi Financial Corp (NASDAQ:HAFC). This group of stocks’ market caps match CPLG’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $33 million in CPLG’s case. MeiraGTx Holdings plc (NASDAQ:MGTX) is the most popular stock in this table. On the other hand National Energy Services Reunited Corp. (NASDAQ:NESR) is the least popular one with only 9 bullish hedge fund positions. CorePoint Lodging Inc. (NYSE:CPLG) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CPLG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CPLG investors were disappointed as the stock returned 0% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.