We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Wyndham Hotels & Resorts, Inc. (NYSE:WH).
Wyndham Hotels & Resorts, Inc. (NYSE:WH) has experienced an increase in enthusiasm from smart money of late. WH was in 40 hedge funds’ portfolios at the end of March. There were 37 hedge funds in our database with WH positions at the end of the previous quarter. Our calculations also showed that wh isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s go over the recent hedge fund action encompassing Wyndham Hotels & Resorts, Inc. (NYSE:WH).
Hedge fund activity in Wyndham Hotels & Resorts, Inc. (NYSE:WH)
Heading into the second quarter of 2019, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WH over the last 15 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Long Pond Capital was the largest shareholder of Wyndham Hotels & Resorts, Inc. (NYSE:WH), with a stake worth $146.9 million reported as of the end of March. Trailing Long Pond Capital was HG Vora Capital Management, which amassed a stake valued at $80 million. Tremblant Capital, Carlson Capital, and Lakewood Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, some big names were breaking ground themselves. HG Vora Capital Management, managed by Parag Vora, initiated the largest position in Wyndham Hotels & Resorts, Inc. (NYSE:WH). HG Vora Capital Management had $80 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $10.2 million investment in the stock during the quarter. The other funds with brand new WH positions are Curtis Schenker and Craig Effron’s Scoggin, Ward Davis and Brian Agnew’s Caerus Global Investors, and Matthew Tewksbury’s Stevens Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Wyndham Hotels & Resorts, Inc. (NYSE:WH). We will take a look at Ashland Global Holdings Inc. (NYSE:ASH), SYNNEX Corporation (NYSE:SNX), Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), and Globus Medical Inc (NYSE:GMED). This group of stocks’ market valuations are similar to WH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASH | 30 | 1175282 | -7 |
| SNX | 11 | 158063 | 0 |
| HZNP | 41 | 1304450 | 13 |
| GMED | 24 | 265383 | 6 |
| Average | 26.5 | 725795 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $726 million. That figure was $791 million in WH’s case. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) is the most popular stock in this table. On the other hand SYNNEX Corporation (NYSE:SNX) is the least popular one with only 11 bullish hedge fund positions. Wyndham Hotels & Resorts, Inc. (NYSE:WH) is not the most popular stock in this group but hedge fund interest is still above average. 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 WH as the stock returned 7.5% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
