The fourth quarter was a rough one for most investors, as fears of a rising interest rate environment in the U.S, a trade war with China, and a more or less stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards RLJ Lodging Trust (NYSE:RLJ), and what that likely means for the prospects of the company and its stock.
RLJ Lodging Trust (NYSE:RLJ) investors should pay attention to an increase in enthusiasm from smart money in recent months. RLJ was in 20 hedge funds’ portfolios at the end of the third quarter of 2018. There were 18 hedge funds in our database with RLJ holdings at the end of the previous quarter. Our calculations also showed that rlj isn’t among the 30 most popular stocks among hedge funds.
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We’re going to review the key hedge fund action encompassing RLJ Lodging Trust (NYSE:RLJ).
What have hedge funds been doing with RLJ Lodging Trust (NYSE:RLJ)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in RLJ over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fisher Asset Management was the largest shareholder of RLJ Lodging Trust (NYSE:RLJ), with a stake worth $61 million reported as of the end of September. Trailing Fisher Asset Management was Citadel Investment Group, which amassed a stake valued at $57.9 million. AEW Capital Management, Scopus Asset Management, and Indaba Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, some big names were breaking ground themselves. Scopus Asset Management, managed by Alexander Mitchell, established the most valuable call position in RLJ Lodging Trust (NYSE:RLJ). Scopus Asset Management had $11 million invested in the company at the end of the quarter. Ian Simm’s Impax Asset Management also initiated a $1 million position during the quarter. The other funds with brand new RLJ positions are John Overdeck and David Siegel’s Two Sigma Advisors and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as RLJ Lodging Trust (NYSE:RLJ) but similarly valued. We will take a look at ALLETE Inc (NYSE:ALE), Cree, Inc. (NASDAQ:CREE), Matador Resources Co (NYSE:MTDR), and Acxiom Holdings, Inc. (NASDAQ:ACXM). This group of stocks’ market values match RLJ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALE | 17 | 178339 | 2 |
| CREE | 13 | 215668 | 3 |
| MTDR | 10 | 153988 | 0 |
| ACXM | 15 | 327368 | -4 |
| Average | 13.75 | 218841 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $219 million. That figure was $330 million in RLJ’s case. ALLETE Inc (NYSE:ALE) is the most popular stock in this table. On the other hand Matador Resources Co (NYSE:MTDR) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks RLJ Lodging Trust (NYSE:RLJ) 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.
Disclosure: None. This article was originally published at Insider Monkey.
