The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Sunstone Hotel Investors Inc (NYSE:SHO) .
Sunstone Hotel Investors Inc (NYSE:SHO) has seen a decrease in hedge fund sentiment in recent months. There were 9 hedge funds in our database with SHO positions 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 Kite Pharma Inc (NASDAQ:KITE), Manchester United PLC (NYSE:MANU), and United States Steel Corporation (NYSE:X) to gather more data points.
Follow Sunstone Hotel Investors Inc. (NYSE:SHO)
Follow Sunstone Hotel Investors Inc. (NYSE:SHO)
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 analyze the fresh action encompassing Sunstone Hotel Investors Inc (NYSE:SHO).
How are hedge funds trading Sunstone Hotel Investors Inc (NYSE:SHO)?
At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SHO over the last 5 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Echo Street Capital Management, led by Greg Poole, holds the biggest position in Sunstone Hotel Investors Inc (NYSE:SHO). Echo Street Capital Management has a $8.8 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is AQR Capital Management, led by Cliff Asness, holding a $4.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Glenn Russell Dubin’s Highbridge Capital Management and Israel Englander’s Millennium Management, one of the biggest hedge funds in the world. We should note that none of these hedge funds are 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.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that got rid of their entire stakes in the stock during the third quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management got rid of the biggest position of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $6 million in stock. Michael Swotes’s fund, Castle Ridge Investment Management, also dumped its stock, about $1.8 million worth.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Sunstone Hotel Investors Inc (NYSE:SHO) but similarly valued. These stocks are Kite Pharma Inc (NASDAQ:KITE), Manchester United PLC (NYSE:MANU), United States Steel Corporation (NYSE:X), and Blackstone Mortgage Trust Inc (NYSE:BXMT). This group of stocks’ market values resemble SHO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KITE | 27 | 293694 | 8 |
| MANU | 7 | 108652 | -2 |
| X | 35 | 787667 | 9 |
| BXMT | 17 | 273906 | -1 |
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $366 million. That figure was $22 million in SHO’s case. United States Steel Corporation (NYSE:X) is the most popular stock in this table. On the other hand Manchester United PLC (NYSE:MANU) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Sunstone Hotel Investors Inc (NYSE:SHO) is even less popular than MANU. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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