It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in China Lodging Group, Ltd (ADR) (NASDAQ:HTHT).
Among the funds in our database, China Lodging Group, Ltd (ADR) (NASDAQ:HTHT) was included in the equity portfolios of 16 funds at the end of September, down from 15 funds at the end of June. 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 HudBay Minerals Inc Ord Shs (NYSE:HBM), Emergent Biosolutions Inc (NYSE:EBS), and 8Point3 Energy Partners LP (NASDAQ:CAFD) to gather more data points.
Follow Huazhu Group Limited (NASDAQ:HTHT)
Follow Huazhu Group Limited (NASDAQ:HTHT)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to check out the latest action regarding China Lodging Group, Ltd (ADR) (NASDAQ:HTHT).
What have hedge funds been doing with China Lodging Group, Ltd (ADR) (NASDAQ:HTHT)?
A total of 16 funds tracked by Insider Monkey were long China Lodging Group at the end of September, up by 7% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards HTHT over the last five quarters. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, GMT Capital holds the largest position in China Lodging Group, Ltd (ADR) (NASDAQ:HTHT). GMT Capital has a $47.2 million position in the stock, comprising 1% of its 13F portfolio. Sitting at the No. 2 spot is Jim Simons’ Renaissance Technologies holding a $29 million position; 0.1% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions consist of Ernest Chow and Jonathan Howe’s Sensato Capital Management, Richard Driehaus’ Driehaus Capital, and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that Sensato Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, key hedge funds were breaking ground themselves. Fisher Asset Management, led by Ken Fisher, created the most outsized position in China Lodging Group, Ltd (ADR) (NASDAQ:HTHT). Fisher Asset Management had $3 million invested in the company at the end of the quarter. Run Ye, Junji Takegami and Hoyon Hwang’s Tiger Pacific Capital also initiated a $1.9 million position during the quarter. The only other fund with a new position in the stock is Robert B. Gillam’s McKinley Capital Management.
Let’s go over hedge fund activity in other stocks similar to China Lodging Group, Ltd (ADR) (NASDAQ:HTHT). These stocks are HudBay Minerals Inc Ord Shs (NYSE:HBM), Emergent Biosolutions Inc (NYSE:EBS), 8Point3 Energy Partners LP (NASDAQ:CAFD), and Terreno Realty Corporation (NYSE:TRNO). All of these stocks’ market caps match HTHT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HBM | 9 | 88043 | -3 |
| EBS | 14 | 135032 | -3 |
| CAFD | 12 | 47538 | 4 |
| TRNO | 9 | 21755 | 0 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $119 million in HTHT’s case. Emergent Biosolutions Inc (NYSE:EBS) is the most popular stock in this table, while HudBay Minerals Inc Ord Shs (NYSE:HBM) is the least popular one with only nine investors holding long positions. Compared to these stocks China Lodging Group, Ltd (ADR) (NASDAQ:HTHT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
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