Is DiamondRock Hospitality Company (NYSE:DRH) the right investment to pursue these days? Investors who are in the know are turning less bullish. The number of long hedge fund positions decreased by 6 recently.
To most market participants, hedge funds are perceived as underperforming, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation at present, we at Insider Monkey look at the elite of this club, close to 450 funds. It is widely believed that this group has its hands on the majority of all hedge funds’ total capital, and by paying attention to their highest performing stock picks, we have revealed a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Just as key, bullish insider trading sentiment is a second way to break down the marketplace. Obviously, there are plenty of reasons for an executive to cut shares of his or her company, but only one, very clear reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” know where to look (learn more here).
With these “truths” under our belt, we’re going to take a peek at the recent action encompassing DiamondRock Hospitality Company (NYSE:DRH).
How are hedge funds trading DiamondRock Hospitality Company (NYSE:DRH)?
At year’s end, a total of 6 of the hedge funds we track held long positions in this stock, a change of -50% from the previous quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully.
When looking at the hedgies we track, Ken Griffin’s Citadel Investment Group had the largest position in DiamondRock Hospitality Company (NYSE:DRH), worth close to $53.1 million, accounting for 0.1% of its total 13F portfolio. Coming in second is Pzena Investment Management, managed by Richard S. Pzena, which held a $21.6 million position; 0.2% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and J. Alan Reid, Jr.’s Forward Management.
Seeing as DiamondRock Hospitality Company (NYSE:DRH) has faced a declination in interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedge funds that slashed their full holdings at the end of the year. Interestingly, Ken Heebner’s Capital Growth Management said goodbye to the largest stake of all the hedgies we key on, worth about $76.9 million in stock.. D. E. Shaw’s fund, D E Shaw, also dumped its stock, about $3.2 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 6 funds at the end of the year.
Insider trading activity in DiamondRock Hospitality Company (NYSE:DRH)
Insider buying is best served when the company in focus has seen transactions within the past half-year. Over the latest half-year time period, DiamondRock Hospitality Company (NYSE:DRH) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to DiamondRock Hospitality Company (NYSE:DRH). These stocks are RLJ Lodging Trust (NYSE:RLJ), LaSalle Hotel Properties (NYSE:LHO), Pebblebrook Hotel Trust (NYSE:PEB), Sunstone Hotel Investors Inc (NYSE:SHO), and Strategic Hotels and Resorts Inc (NYSE:BEE). All of these stocks are in the reit – hotel/motel industry and their market caps are closest to DRH’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| RLJ Lodging Trust (NYSE:RLJ) | 10 | 0 | 1 |
| LaSalle Hotel Properties (NYSE:LHO) | 8 | 0 | 1 |
| Pebblebrook Hotel Trust (NYSE:PEB) | 7 | 0 | 0 |
| Sunstone Hotel Investors Inc (NYSE:SHO) | 16 | 0 | 1 |
| Strategic Hotels and Resorts Inc (NYSE:BEE) | 13 | 0 | 0 |
With the returns demonstrated by our tactics, retail investors must always pay attention to hedge fund and insider trading sentiment, and DiamondRock Hospitality Company (NYSE:DRH) is no exception.
