Is BHR A Good Stock To Buy Now?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Braemar Hotels & Resorts Inc. (NYSE:BHR) based on that data.

Is BHR a good stock to buy now? Braemar Hotels & Resorts Inc. (NYSE:BHR) was in 14 hedge funds’ portfolios at the end of September. The all time high for this statistic is 20. BHR investors should pay attention to a decrease in support from the world’s most elite money managers recently. There were 17 hedge funds in our database with BHR positions at the end of the second quarter. Our calculations also showed that BHR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to review the fresh hedge fund action surrounding Braemar Hotels & Resorts Inc. (NYSE:BHR).

Do Hedge Funds Think BHR Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in BHR a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Among these funds, Highland Capital Management held the most valuable stake in Braemar Hotels & Resorts Inc. (NYSE:BHR), which was worth $14.1 million at the end of the third quarter. On the second spot was LDR Capital which amassed $1.8 million worth of shares. D E Shaw, Millennium Management, and Arrowstreet 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 Highland Capital Management allocated the biggest weight to Braemar Hotels & Resorts Inc. (NYSE:BHR), around 3.2% of its 13F portfolio. LDR Capital is also relatively very bullish on the stock, dishing out 1.74 percent of its 13F equity portfolio to BHR.

Seeing as Braemar Hotels & Resorts Inc. (NYSE:BHR) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few money managers who were dropping their entire stakes last quarter. At the top of the heap, Cliff Asness’s AQR Capital Management dumped the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $1.3 million in stock. fund, Renaissance Technologies, also sold off its stock, about $0.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Braemar Hotels & Resorts Inc. (NYSE:BHR). We will take a look at Zagg Inc (NASDAQ:ZAGG), Orion Group Holdings, Inc. (NYSE:ORN), Severn Bancorp Inc (NASDAQ:SVBI), S&W Seed Company (NASDAQ:SANW), USA Truck, Inc. (NASDAQ:USAK), Pixelworks, Inc. (NASDAQ:PXLW), and Manitex International, Inc. (NASDAQ:MNTX). This group of stocks’ market values resemble BHR’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.6 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $18 million in BHR’s case. Zagg Inc (NASDAQ:ZAGG) is the most popular stock in this table. On the other hand Severn Bancorp Inc (NASDAQ:SVBI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Braemar Hotels & Resorts Inc. (NYSE:BHR) is more popular among hedge funds. Our overall hedge fund sentiment score for BHR is 73. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on BHR as the stock returned 86% since the end of September (through 12/8) 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.