The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2019. In this article we are going to take a look at smart money sentiment towards Apple Hospitality REIT Inc (NYSE:APLE).
Apple Hospitality REIT Inc (NYSE:APLE) investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. Our calculations also showed that APLE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to view the key hedge fund action encompassing Apple Hospitality REIT Inc (NYSE:APLE).
Hedge fund activity in Apple Hospitality REIT Inc (NYSE:APLE)
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in APLE over the last 17 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Apple Hospitality REIT Inc (NYSE:APLE), with a stake worth $85.5 million reported as of the end of September. Trailing Renaissance Technologies was Forward Management, which amassed a stake valued at $9.8 million. Winton Capital Management, Citadel Investment Group, and Driehaus Capital 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 Forward Management allocated the biggest weight to Apple Hospitality REIT Inc (NYSE:APLE), around 1.48% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.07 percent of its 13F equity portfolio to APLE.
Since Apple Hospitality REIT Inc (NYSE:APLE) has experienced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few fund managers that elected to cut their positions entirely last quarter. At the top of the heap, David E. Shaw’s D E Shaw dropped the largest position of the 750 funds watched by Insider Monkey, totaling close to $1.1 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund cut about $0.8 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Apple Hospitality REIT Inc (NYSE:APLE) but similarly valued. We will take a look at Equitrans Midstream Corporation (NYSE:ETRN), Tech Data Corporation (NASDAQ:TECD), UniFirst Corporation (NYSE:UNF), and Corelogic Inc (NYSE:CLGX). This group of stocks’ market values are similar to APLE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ETRN | 16 | 334604 | 0 |
| TECD | 21 | 450204 | 3 |
| UNF | 23 | 195066 | 0 |
| CLGX | 28 | 370528 | 5 |
| Average | 22 | 337601 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $338 million. That figure was $106 million in APLE’s case. Corelogic Inc (NYSE:CLGX) is the most popular stock in this table. On the other hand Equitrans Midstream Corporation (NYSE:ETRN) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Apple Hospitality REIT Inc (NYSE:APLE) is even less popular than ETRN. Hedge funds dodged a bullet by taking a bearish stance towards APLE. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately APLE wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); APLE investors were disappointed as the stock returned -0.7% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
