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 S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. 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 Ashford Hospitality Prime Inc (NYSE:AHP) .
Ashford Hospitality Prime Inc (NYSE:AHP) investors should pay attention to an increase in enthusiasm from smart money recently. There were 10 hedge funds in our database with AHP positions at the end of the previous quarter. At the end of this article we will also compare AHP to other stocks including Craft Brew Alliance Inc (NASDAQ:BREW), Geron Corporation (NASDAQ:GERN), and Adamas Pharmaceuticals Inc (NASDAQ:ADMS) to get a better sense of its popularity.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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How are hedge funds trading Ashford Hospitality Prime Inc (NYSE:AHP)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 20% increase from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AHP over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, J. Alan Reid, Jr.’s Forward Management has the number one position in Ashford Hospitality Prime Inc (NYSE:AHP), worth close to $61.3 million, corresponding to 4.7% of its total 13F portfolio. Coming in second is Sessa Capital, led by John Petry, which holds a $31.6 million position; 7% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions encompass William C. Martin’s Raging Capital Management and Steve Pei’s Gratia Capital. We’d like to point out an extremely rare observation. Four of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As one would reasonably expect, key hedge funds have been driving this bullishness. Raging Capital Management also made a $28.1 million investment in the stock during the quarter. The following funds were also among the new AHP investors: Israel Englander’s Millennium Management one of the largest hedge funds in the world, Paul Tudor Jones’ Tudor Investment Corp, and Michael Platt and William Reeves’ BlueCrest Capital Mgmt..
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ashford Hospitality Prime Inc (NYSE:AHP) but similarly valued. These stocks are Craft Brew Alliance Inc (NASDAQ:BREW), Geron Corporation (NASDAQ:GERN), Adamas Pharmaceuticals Inc (NASDAQ:ADMS), and Columbus McKinnon Corp. (NASDAQ:CMCO). This group of stocks’ market values match AHP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BREW | 8 | 7161 | 8 |
| GERN | 5 | 2535 | -6 |
| ADMS | 17 | 115160 | 2 |
| CMCO | 14 | 65405 | -1 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $144 million in AHP’s case. Adamas Pharmaceuticals Inc (NASDAQ:ADMS) is the most popular stock in this table. On the other hand Geron Corporation (NASDAQ:GERN) is the least popular one with only 5 bullish hedge fund positions. Ashford Hospitality Prime Inc (NYSE:AHP) 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. In this regard ADMS might be a better candidate to consider taking a long position in.
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