Where Do Hedge Funds Stand On Huazhu Group Limited (HTHT)?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Huazhu Group Limited (NASDAQ:HTHT).

Huazhu Group Limited (NASDAQ:HTHT) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 27 hedge funds’ portfolios at the end of the second quarter of 2021. Our calculations also showed that HTHT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Zendesk Inc (NYSE:ZEN), Bill.com Holdings, Inc. (NYSE:BILL), and CMS Energy Corporation (NYSE:CMS) to gather more data points.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Michael Gelband of ExodusPoint Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to take a look at the latest hedge fund action regarding Huazhu Group Limited (NASDAQ:HTHT).

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

At second quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in HTHT a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Is HTHT A Good Stock To Buy?

Among these funds, Yiheng Capital held the most valuable stake in Huazhu Group Limited (NASDAQ:HTHT), which was worth $162.2 million at the end of the second quarter. On the second spot was Platinum Asset Management which amassed $94.6 million worth of shares. Broad Peak Investment Holdings, Generation Investment Management, and Driehaus Capital 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 One01 Capital allocated the biggest weight to Huazhu Group Limited (NASDAQ:HTHT), around 6.8% of its 13F portfolio. Yiheng Capital is also relatively very bullish on the stock, dishing out 6.53 percent of its 13F equity portfolio to HTHT.

Since Huazhu Group Limited (NASDAQ:HTHT) has experienced bearish sentiment from the smart money, logic holds that there is a sect of fund managers that elected to cut their full holdings last quarter. Interestingly, Seth Fischer’s Oasis Management said goodbye to the biggest position of all the hedgies followed by Insider Monkey, worth about $13.1 million in stock. Josh Resnick’s fund, Jericho Capital Asset Management, also sold off its stock, about $7.9 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks similar to Huazhu Group Limited (NASDAQ:HTHT). These stocks are Zendesk Inc (NYSE:ZEN), Bill.com Holdings, Inc. (NYSE:BILL), CMS Energy Corporation (NYSE:CMS), Hologic, Inc. (NASDAQ:HOLX), Monolithic Power Systems, Inc. (NASDAQ:MPWR), Celanese Corporation (NYSE:CE), and Diamondback Energy Inc (NASDAQ:FANG). All of these stocks’ market caps are closest to HTHT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ZEN 52 1851946 7
BILL 53 2766914 2
CMS 31 693813 3
HOLX 41 977376 9
MPWR 34 702043 2
CE 37 594932 1
FANG 38 443251 3
Average 40.9 1147182 3.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 40.9 hedge funds with bullish positions and the average amount invested in these stocks was $1147 million. That figure was $657 million in HTHT’s case. Bill.com Holdings, Inc. (NYSE:BILL) is the most popular stock in this table. On the other hand CMS Energy Corporation (NYSE:CMS) is the least popular one with only 31 bullish hedge fund positions. Compared to these stocks Huazhu Group Limited (NASDAQ:HTHT) is even less popular than CMS. Our overall hedge fund sentiment score for HTHT is 35. 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 HTHT. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th but managed to beat the market again by 4.5 percentage points. Unfortunately HTHT wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); HTHT investors were disappointed as the stock returned -7.4% since the end of the second quarter (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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