Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ recent losses in Facebook. Let’s take a closer look at what the funds we track think about Hospitality Properties Trust (NASDAQ:HPT) in this article.
Hedge fund interest in Hospitality Properties Trust (NASDAQ:HPT) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as ALLETE Inc (NYSE:ALE), PBF Energy Inc (NYSE:PBF), and Jabil Inc. (NYSE:JBL) to gather more data points.
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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s check out the recent hedge fund action surrounding Hospitality Properties Trust (NASDAQ:HPT).
How have hedgies been trading Hospitality Properties Trust (NASDAQ:HPT)?
Heading into the first quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in HPT over the last 14 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Hospitality Properties Trust (NASDAQ:HPT), with a stake worth $29.8 million reported as of the end of September. Trailing Renaissance Technologies was Pzena Investment Management, which amassed a stake valued at $14.1 million. Millennium Management, Two Sigma Advisors, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Hospitality Properties Trust (NASDAQ:HPT) has experienced falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of funds that slashed their entire stakes in the third quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the largest investment of all the hedgies followed by Insider Monkey, comprising an estimated $2.8 million in stock. J. Carlo Cannell’s fund, Cannell Capital, also cut its stock, about $0.5 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Hospitality Properties Trust (NASDAQ:HPT). We will take a look at ALLETE Inc (NYSE:ALE), PBF Energy Inc (NYSE:PBF), Jabil Inc. (NYSE:JBL), and First Financial Bankshares Inc (NASDAQ:FFIN). This group of stocks’ market values resemble HPT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALE | 18 | 207421 | 1 |
| PBF | 18 | 393653 | -11 |
| JBL | 20 | 316036 | -2 |
| FFIN | 6 | 6455 | 0 |
| Average | 15.5 | 230891 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $70 million in HPT’s case. Jabil Inc. (NYSE:JBL) is the most popular stock in this table. On the other hand First Financial Bankshares Inc (NASDAQ:FFIN) is the least popular one with only 6 bullish hedge fund positions. Hospitality Properties Trust (NASDAQ:HPT) 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. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately HPT wasn’t nearly as popular as these 15 stock and hedge funds that were betting on HPT were disappointed as the stock returned 9.9% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.