Hedge Funds Aren’t Crazy About RLJ Lodging Trust (RLJ) Anymore

Should RLJ Lodging Trust (NYSE:RLJ) investors track the following data?

At the moment, there are tons of indicators investors can use to monitor Mr. Market. Some of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite fund managers can outclass the S&P 500 by a significant amount (see just how much).

Just as necessary, optimistic insider trading sentiment is another way to analyze the stock market universe. There are a number of stimuli for a bullish insider to downsize shares of his or her company, but only one, very simple reason why they would buy. Many academic studies have demonstrated the useful potential of this method if piggybackers know what to do (learn more here).

Furthermore, it’s important to study the latest info about RLJ Lodging Trust (NYSE:RLJ).

What have hedge funds been doing with RLJ Lodging Trust (NYSE:RLJ)?

At Q2’s end, a total of 12 of the hedge funds we track held long positions in this stock, a change of -40% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly.

According to our 13F database, Capital Growth Management, managed by Ken Heebner, holds the most valuable position in RLJ Lodging Trust (NYSE:RLJ). Capital Growth Management has a $85.8 million position in the stock, comprising 2.3% of its 13F portfolio. The second largest stake is held by Jeffrey Furber of AEW Capital Management, with a $39.3 million position; the fund has 1% of its 13F portfolio invested in the stock. Some other peers that are bullish include D. E. Shaw’s D E Shaw, Cliff Asness’s AQR Capital Management and Richard Driehaus’s Driehaus Capital.

Because RLJ Lodging Trust (NYSE:RLJ) has experienced bearish sentiment from upper-tier hedge fund managers, it’s safe to say that there lies a certain “tier” of funds that elected to cut their entire stakes heading into Q2. Interestingly, John Khoury’s Long Pond Capital dropped the biggest position of the “upper crust” of funds we watch, totaling an estimated $16.2 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dumped its stock, about $4.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 8 funds heading into Q2.

How have insiders been trading RLJ Lodging Trust (NYSE:RLJ)?

Insider buying made by high-level executives is best served when the company we’re looking at has experienced transactions within the past six months. Over the latest half-year time frame, RLJ Lodging Trust (NYSE:RLJ) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to RLJ Lodging Trust (NYSE:RLJ). These stocks are Pebblebrook Hotel Trust (NYSE:PEB), Strategic Hotels and Resorts Inc (NYSE:BEE), DiamondRock Hospitality Company (NYSE:DRH), Sunstone Hotel Investors Inc (NYSE:SHO), and LaSalle Hotel Properties (NYSE:LHO). All of these stocks are in the reit – hotel/motel industry and their market caps resemble RLJ’s market cap.