Is Extended Stay America Inc (NYSE:STAY) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Extended Stay America Inc (NYSE:STAY) investors should pay attention to an increase in support from the world’s most elite money managers recently. STAY was in 16 hedge funds’ portfolios at the end of the third quarter of 2015. There were 13 hedge funds in our database with STAY holdings at the end of the previous quarter. 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 J2 Global Inc (NASDAQ:JCOM), PAREXEL International Corporation (NASDAQ:PRXL), and Neurocrine Biosciences, Inc. (NASDAQ:NBIX) to gather more data points.
Follow Extended Stay America Inc. (NYSE:STAY)
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To most shareholders, hedge funds are viewed as worthless, outdated investment vehicles of years past. While there are more than 8000 funds with their doors open today, Our researchers hone in on the moguls of this group, about 700 funds. These money managers administer most of all hedge funds’ total capital, and by following their first-class investments, Insider Monkey has come up with several investment strategies that have historically outrun Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points a year for a decade in their back tests.
With all of this in mind, we’re going to take a peek at the recent action regarding Extended Stay America Inc (NYSE:STAY).
What have hedge funds been doing with Extended Stay America Inc (NYSE:STAY)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from the second quarter. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Centerbridge Partners, managed by Mark T. Gallogly, holds the number one position in Extended Stay America Inc (NYSE:STAY). Centerbridge Partners has an $799.8 million position in the stock, comprising 46.5% of its 13F portfolio. The second largest stake is held by Paulson & Co, managed by John Paulson, which holds an $799.8 million position; the fund has 4.2% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish encompass Jeffrey Furber’s AEW Capital Management, and Israel Englander’s Millennium Management.
As aggregate interest increased, some big names have been driving this bullishness. GoldenTree Asset Management, managed by Steven Tananbaum, established the largest position in Extended Stay America Inc (NYSE:STAY). GoldenTree Asset Management had $13.2 million invested in the company at the end of the quarter. Paritosh Gupta’s Adi Capital Management also made a $7.2 million investment in the stock during the quarter. The following funds were also among the new STAY investors: Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Matthew Tewksbury’s Stevens Capital Management, and D. E. Shaw’s D E Shaw.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Extended Stay America Inc (NYSE:STAY) but similarly valued. We will take a look at J2 Global Inc (NASDAQ:JCOM), PAREXEL International Corporation (NASDAQ:PRXL), Neurocrine Biosciences, Inc. (NASDAQ:NBIX), and Yandex NV (NASDAQ:YNDX). All of these stocks’ market caps match STAY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JCOM | 14 | 116950 | 1 |
| PRXL | 13 | 306752 | -8 |
| NBIX | 36 | 696872 | 5 |
| YNDX | 24 | 290391 | 1 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $353 million. That figure was $1685 million in STAY’s case. Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is the most popular stock in this table, while PAREXEL International Corporation (NASDAQ:PRXL) is the least popular one. Although Extended Stay America Inc (NYSE:STAY), with 16 bullish hedge fund positions, is not the least popular stock in this group, 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 most collectively bullish on, such as, in this particular case, NBIX.
