We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Ryman Hospitality Properties, Inc. (NYSE:RHP).
Ryman Hospitality Properties, Inc. (NYSE:RHP) shareholders have witnessed an increase in support from the world’s most elite money managers lately. Our calculations also showed that RHP isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
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 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Mario Gabelli of GAMCO Investors
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the latest hedge fund action surrounding Ryman Hospitality Properties, Inc. (NYSE:RHP).
What does smart money think about Ryman Hospitality Properties, Inc. (NYSE:RHP)?
At Q4’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in RHP over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, GAMCO Investors was the largest shareholder of Ryman Hospitality Properties, Inc. (NYSE:RHP), with a stake worth $200.8 million reported as of the end of September. Trailing GAMCO Investors was Millennium Management, which amassed a stake valued at $61 million. Water Street Capital, Balyasny Asset Management, and Citadel Investment Group 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 Water Street Capital allocated the biggest weight to Ryman Hospitality Properties, Inc. (NYSE:RHP), around 3.42% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, designating 2.71 percent of its 13F equity portfolio to RHP.
As one would reasonably expect, specific money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the most valuable position in Ryman Hospitality Properties, Inc. (NYSE:RHP). Balyasny Asset Management had $28.5 million invested in the company at the end of the quarter. Eduardo Abush’s Waterfront Capital Partners also initiated a $17.8 million position during the quarter. The other funds with brand new RHP positions are Brandon Haley’s Holocene Advisors, Benjamin A. Smith’s Laurion Capital Management, and Matthew L Pinz’s Pinz Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Ryman Hospitality Properties, Inc. (NYSE:RHP) but similarly valued. These stocks are Deckers Outdoor Corp (NYSE:DECK), Shell Midstream Partners LP (NYSE:SHLX), Tempur Sealy International Inc. (NYSE:TPX), and Envista Holdings Corporation (NYSE:NVST). All of these stocks’ market caps are closest to RHP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DECK | 43 | 689636 | 14 |
| SHLX | 8 | 38182 | 1 |
| TPX | 42 | 1239067 | 11 |
| NVST | 42 | 1281321 | 21 |
| Average | 33.75 | 812052 | 11.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.75 hedge funds with bullish positions and the average amount invested in these stocks was $812 million. That figure was $458 million in RHP’s case. Deckers Outdoor Corp (NYSE:DECK) is the most popular stock in this table. On the other hand Shell Midstream Partners LP (NYSE:SHLX) is the least popular one with only 8 bullish hedge fund positions. Ryman Hospitality Properties, Inc. (NYSE:RHP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately RHP wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); RHP investors were disappointed as the stock returned -62.9% 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 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
