Sunstone Hotel Investors Inc (NYSE:SHO) was in 13 hedge funds’ portfolio at the end of March. SHO shareholders have witnessed a decrease in hedge fund interest of late. There were 16 hedge funds in our database with SHO positions at the end of the previous quarter.
According to most market participants, hedge funds are seen as slow, old financial vehicles of the past. While there are greater than 8000 funds trading at present, we look at the bigwigs of this club, around 450 funds. It is estimated that this group oversees the majority of the smart money’s total capital, and by tracking their top investments, we have revealed a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually 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 23.3 percentage points in 8 months (see all of our picks from August).
Just as integral, bullish insider trading sentiment is another way to break down the marketplace. Just as you’d expect, there are a number of incentives for a corporate insider to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this tactic if shareholders know what to do (learn more here).
Keeping this in mind, we’re going to take a peek at the latest action surrounding Sunstone Hotel Investors Inc (NYSE:SHO).
What does the smart money think about Sunstone Hotel Investors Inc (NYSE:SHO)?
At Q1’s end, a total of 13 of the hedge funds we track were long in this stock, a change of -19% from the first quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly.
When looking at the hedgies we track, Capital Growth Management, managed by Ken Heebner, holds the most valuable position in Sunstone Hotel Investors Inc (NYSE:SHO). Capital Growth Management has a $63.3 million position in the stock, comprising 1.6% of its 13F portfolio. The second largest stake is held by J. Alan Reid, Jr. of Forward Management, with a $19.4 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Glenn Fuhrman and John Phelan’s MSD Capital and Cliff Asness’s AQR Capital Management.
Because Sunstone Hotel Investors Inc (NYSE:SHO) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of money managers that slashed their positions entirely at the end of the first quarter. At the top of the heap, James H. Litinsky’s JHL Capital Group dropped the largest investment of the “upper crust” of funds we monitor, valued at close to $41.2 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund cut about $2.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds at the end of the first quarter.
What have insiders been doing with Sunstone Hotel Investors Inc (NYSE:SHO)?
Insider buying is most useful when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time period, Sunstone Hotel Investors Inc (NYSE:SHO) has seen 1 unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Sunstone Hotel Investors Inc (NYSE:SHO). These stocks are RLJ Lodging Trust (NYSE:RLJ), LaSalle Hotel Properties (NYSE:LHO), Pebblebrook Hotel Trust (NYSE:PEB), Strategic Hotels and Resorts Inc (NYSE:BEE), and DiamondRock Hospitality Company (NYSE:DRH). This group of stocks are in the reit – hotel/motel industry and their market caps resemble SHO’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| RLJ Lodging Trust (NYSE:RLJ) | 20 | 0 | 1 |
| LaSalle Hotel Properties (NYSE:LHO) | 8 | 0 | 1 |
| Pebblebrook Hotel Trust (NYSE:PEB) | 5 | 0 | 0 |
| Strategic Hotels and Resorts Inc (NYSE:BEE) | 20 | 0 | 0 |
| DiamondRock Hospitality Company (NYSE:DRH) | 15 | 0 | 0 |
With the results exhibited by the aforementioned studies, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Sunstone Hotel Investors Inc (NYSE:SHO) applies perfectly to this mantra.
