The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtCorePoint Lodging Inc. (NYSE:CPLG) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Is CorePoint Lodging Inc. (NYSE:CPLG) ready to rally soon? The smart money was in a pessimistic mood. The number of bullish hedge fund bets went down by 1 lately. Our calculations also showed that CPLG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). CPLG was in 10 hedge funds’ portfolios at the end of March. There were 11 hedge funds in our database with CPLG positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the latest hedge fund action surrounding CorePoint Lodging Inc. (NYSE:CPLG).
What does smart money think about CorePoint Lodging Inc. (NYSE:CPLG)?
At the end of the first quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in CPLG over the last 18 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Newtyn Management was the largest shareholder of CorePoint Lodging Inc. (NYSE:CPLG), with a stake worth $9 million reported as of the end of September. Trailing Newtyn Management was Solas Capital Management, which amassed a stake valued at $3.6 million. Arrowstreet Capital, Renaissance Technologies, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Solas Capital Management allocated the biggest weight to CorePoint Lodging Inc. (NYSE:CPLG), around 3.93% of its 13F portfolio. Newtyn Management is also relatively very bullish on the stock, earmarking 3.09 percent of its 13F equity portfolio to CPLG.
Since CorePoint Lodging Inc. (NYSE:CPLG) has witnessed a decline in interest from the smart money, logic holds that there were a few hedge funds that elected to cut their positions entirely in the first quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the largest position of all the hedgies monitored by Insider Monkey, valued at close to $1.5 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also said goodbye to its stock, about $0.1 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds in the first quarter.
Let’s check out hedge fund activity in other stocks similar to CorePoint Lodging Inc. (NYSE:CPLG). These stocks are Xunlei Ltd (NASDAQ:XNET), Metropolitan Bank Holding Corp. (NYSE:MCB), Playa Hotels & Resorts N.V. (NASDAQ:PLYA), and BBX Capital Corporation (NYSE:BBX). This group of stocks’ market caps are similar to CPLG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XNET | 4 | 1229 | -2 |
| MCB | 7 | 22530 | 0 |
| PLYA | 15 | 112926 | -3 |
| BBX | 11 | 9735 | -4 |
| Average | 9.25 | 36605 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $17 million in CPLG’s case. Playa Hotels & Resorts N.V. (NASDAQ:PLYA) is the most popular stock in this table. On the other hand Xunlei Ltd (NASDAQ:XNET) is the least popular one with only 4 bullish hedge fund positions. CorePoint Lodging Inc. (NYSE:CPLG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately CPLG wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CPLG were disappointed as the stock returned 7.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
