Is FelCor Lodging Trust Incorporated (FCH) A Good Stock To Buy?

Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: FelCor Lodging Trust Incorporated (NYSE:FCH).

FelCor Lodging Trust Incorporated (NYSE:FCH) was included in the equity portfolios of 17 funds tracked by Insider Monkey at the end of September. The company saw a decrease in activity from the world’s largest hedge funds last quarter, since there had been 21 funds bullish on the stock a quarter earlier. At the end of this article we will also compare FCH to other stocks including Heartland Financial USA Inc (NASDAQ:HTLF), Transocean Partners LLC (NYSE:RIGP), and Virtusa Corporation (NASDAQ:VRTU) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Now, we’re going to take a look at the key action regarding FelCor Lodging Trust Incorporated (NYSE:FCH).

Hedge fund activity in FelCor Lodging Trust Incorporated (NYSE:FCH)

Heading into the fourth quarter of 2016, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on FelCor Lodging Trust Incorporated, down by 19% from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in FCH heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Land & Buildings Investment Management, led by Jonathan Litt, holds the biggest position in FelCor Lodging Trust Incorporated (NYSE:FCH). Land & Buildings Investment Management has a $56.2 million position in the stock, comprising 14.4% of its 13F portfolio. On Land & Buildings Investment Management’s heels is J. Alan Reid, Jr. of Forward Management, with a $25.6 million position; 1.9% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions consist of Jim Simons’ Renaissance Technologies, Gregg Moskowitz’s Interval Partners, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital. We should note that Forward Management is 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.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually dropped their positions entirely. Intriguingly, Israel Englander’s Millennium Management dropped the biggest investment of the 700 funds tracked by Insider Monkey, totaling about $2.9 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dumped its stock, worth about $2.4 million.

Let’s check out hedge fund activity in other stocks similar to FelCor Lodging Trust Incorporated (NYSE:FCH). We will take a look at Heartland Financial USA Inc (NASDAQ:HTLF), Transocean Partners LLC (NYSE:RIGP), Virtusa Corporation (NASDAQ:VRTU), and First Bancorp (NYSE:FBP). This group of stocks’ market valuations resemble FCH’s market valuation.

As you can see these stocks had an average of 10 funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $123 million in FCH’s case. First Bancorp (NYSE:FBP) is the most popular stock in this table. On the other hand Virtusa Corporation (NASDAQ:VRTU) is the least popular one with only seven investors holding shares. FelCor Lodging Trust Incorporated (NYSE:FCH) 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 First Bancorp (NYSE:FBP) might be a better candidate to consider taking a long position in.