At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards CorePoint Lodging Inc. (NYSE:CPLG).
Is CPLG a good stock to buy now? CorePoint Lodging Inc. (NYSE:CPLG) has seen a decrease in support from the world’s most elite money managers recently. CorePoint Lodging Inc. (NYSE:CPLG) was in 10 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 23. There were 12 hedge funds in our database with CPLG holdings at the end of June. Our calculations also showed that CPLG 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.
In the eyes of most market participants, hedge funds are seen as worthless, old investment vehicles of yesteryear. While there are more than 8000 funds with their doors open today, Our experts look at the top tier of this group, approximately 850 funds. These investment experts administer most of the hedge fund industry’s total asset base, and by monitoring their matchless picks, Insider Monkey has revealed several investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Ken Griffin of Citadel Investment Group
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 take a look at the new hedge fund action regarding CorePoint Lodging Inc. (NYSE:CPLG).
Do Hedge Funds Think CPLG Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in CPLG a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in CorePoint Lodging Inc. (NYSE:CPLG) was held by Newtyn Management, which reported holding $13.6 million worth of stock at the end of September. It was followed by Solas Capital Management with a $5 million position. Other investors bullish on the company included Arrowstreet Capital, Renaissance Technologies, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Solas Capital Management allocated the biggest weight to CorePoint Lodging Inc. (NYSE:CPLG), around 4.83% of its 13F portfolio. Newtyn Management is also relatively very bullish on the stock, setting aside 3.3 percent of its 13F equity portfolio to CPLG.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: ExodusPoint Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified CPLG as a viable investment and initiated a position in the stock.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CorePoint Lodging Inc. (NYSE:CPLG) but similarly valued. These stocks are Repro Med Systems, Inc. (NASDAQ:KRMD), HEXO Corp. (NYSE:HEXO), Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE), Capital City Bank Group, Inc. (NASDAQ:CCBG), Qudian Inc. (NYSE:QD), Great Panther Mining Ltd (NYSE:GPL), and The Container Store Group Inc (NYSE:TCS). This group of stocks’ market values are similar to CPLG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KRMD | 15 | 15709 | 0 |
| HEXO | 4 | 374 | -1 |
| AGLE | 22 | 147695 | 3 |
| CCBG | 6 | 6349 | 3 |
| QD | 6 | 8739 | -2 |
| GPL | 5 | 4961 | 1 |
| TCS | 14 | 181766 | 5 |
| Average | 10.3 | 52228 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.3 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $25 million in CPLG’s case. Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) is the most popular stock in this table. On the other hand HEXO Corp. (NYSE:HEXO) is the least popular one with only 4 bullish hedge fund positions. CorePoint Lodging Inc. (NYSE:CPLG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CPLG is 32.7. 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 gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on CPLG as the stock returned 27.5% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
