Ryman Hospitality Properties, Inc. (NYSE:RHP) has seen an increase in support from the world’s most elite money managers lately. RHP was in 27 hedge funds’ portfolio at the end of March. There were 23 hedge funds in our database with RHP holdings at the end of 2014. In this article we will share Corsair Capital’s views on RHP. But first, let us explain why we even care about what hedge funds think about these stocks.
We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by 80 percentage points (135% return vs. S&P 500’s 55% gain) over the last 34 months (see the details here).
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Corsair Capital talked about its Ryman Hospitality Properties, Inc. (NYSE:RHP) position in its 2015 Q1 investor letter. We like Corsair Capital whose Corsair Select fund delivered a net return of 13.6% annually since its inception at the beginning of 2004. S&P 500 Index returned only 7.9% during the same period. Corsair Select also returned 6.1% during the first quarter, outperforming the S&P 500 by more than 5 percentage points. Here is what they said:
“Ryman Hospitality Properties (“RHP”) climbed from $52.74 to $60.91 during the quarter. As we noted in some of our 2014 letters, RHP continues to reap the benefits of its transformation from a C-corp. to a REIT and the sale of its hotel management rights to Marriott. During the quarter, the company announced strong 2014 results and 2015 guidance. As well, the company raised its dividend by 18%, exceeding expectations, reflecting the strength of its business. As the valuation gap between RHP and its peers continues to narrow, we believe investors are starting to focus on what we see; a premium business, a solid balance sheet, and a management team focused on creating shareholder value. Therefore, RHP should merit a premium multiple as well.”
With all of this in mind, we’re going to review the new action encompassing Ryman Hospitality Properties, Inc. (NYSE:RHP).
At Q1’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the previous quarter. Hirzel Capital Management, managed by Zac Hirzel, holds the largest position in Ryman Hospitality Properties, Inc. (NYSE:RHP). Hirzel Capital Management has a $57.9 million position in the stock, comprising 6% of its 13F portfolio. Sitting at the No. 2 spot is Ken Heebner of Capital Growth Management, with a $53.3 million position; 1.5% of its 13F portfolio is allocated to the stock. Other hedge funds that hold long positions contain Jay Petschek’s Corsair Capital Management, Gilchrist Berg’s Water Street Capital and D. E. Shaw’s D E Shaw.
The number of hedge funds with bullish RHP positions went up during the first quarter but the new funds added very small positions.. PDT Partners, managed by Peter Muller, initiated the most outsized position in Ryman Hospitality Properties, Inc. (NYSE:RHP). PDT Partners had $1.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.8 million position during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, David Costen Haley’s HBK Investments, and Jacob Gottlieb’s Visium Asset Management.
Overall, RHP isn’t one of our top ideas but we believe the positive hedge fund sentiment indicates that it is likely to outperform the market in the next 12 months.
