It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 12.1% in the first 5 months of this year (through May 30th). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 18.7% during the same 5-month period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Target Hospitality Corp. (NASDAQ:TH).
Target Hospitality Corp. (NASDAQ:TH) was in 17 hedge funds’ portfolios at the end of March. TH has experienced an increase in hedge fund sentiment of late. There were 0 hedge funds in our database with TH positions at the end of the previous quarter. Our calculations also showed that th isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are plenty of methods shareholders use to analyze publicly traded companies. A duo of the most under-the-radar methods are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top fund managers can beat the market by a healthy amount (see the details here).
Let’s check out the new hedge fund action regarding Target Hospitality Corp. (NASDAQ:TH).
Hedge fund activity in Target Hospitality Corp. (NASDAQ:TH)
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17 from the fourth quarter of 2018. On the other hand, there were a total of 0 hedge funds with a bullish position in TH a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Target Hospitality Corp. (NASDAQ:TH) was held by Rubric Capital Management, which reported holding $23.8 million worth of stock at the end of March. It was followed by Element Capital Management with a $11.7 million position. Other investors bullish on the company included Private Capital Management, Moore Global Investments, and Arrowgrass Capital Partners.
Now, specific money managers were breaking ground themselves. Rubric Capital Management, managed by David Rosen, established the biggest position in Target Hospitality Corp. (NASDAQ:TH). Rubric Capital Management had $23.8 million invested in the company at the end of the quarter. Jeffrey Talpins’s Element Capital Management also initiated a $11.7 million position during the quarter. The other funds with new positions in the stock are Gregg J. Powers’s Private Capital Management, Louis Bacon’s Moore Global Investments, and Nick Niell’s Arrowgrass Capital Partners.
Let’s go over hedge fund activity in other stocks similar to Target Hospitality Corp. (NASDAQ:TH). These stocks are CNB Financial Corporation (NASDAQ:CCNE), Chuy’s Holdings Inc (NASDAQ:CHUY), Reading International, Inc. (NASDAQ:RDI), and Napco Security Technologies Inc (NASDAQ:NSSC). All of these stocks’ market caps are closest to TH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CCNE | 5 | 27376 | 1 |
| CHUY | 10 | 32632 | -2 |
| RDI | 6 | 24298 | -2 |
| NSSC | 7 | 11907 | 3 |
| Average | 7 | 24053 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $86 million in TH’s case. Chuy’s Holdings Inc (NASDAQ:CHUY) is the most popular stock in this table. On the other hand CNB Financial Corporation (NASDAQ:CCNE) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Target Hospitality Corp. (NASDAQ:TH) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on TH as the stock returned 7.1% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.