Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved, lost a third of its value since the end of July. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2018 yielded an average return of 6.7% year-to-date, vs. a gain of 2.6% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Host Hotels and Resorts Inc (NYSE:HST).
Hedge fund interest in Host Hotels and Resorts Inc (NYSE:HST) 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 First Republic Bank (NYSE:FRC), Fortinet Inc (NASDAQ:FTNT), and Shopify Inc (NYSE:SHOP) to gather more data points.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to view the recent hedge fund action regarding Host Hotels and Resorts Inc (NYSE:HST).
How are hedge funds trading Host Hotels and Resorts Inc (NYSE:HST)?
At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, no change from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in HST over the last 13 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, AEW Capital Management, managed by Jeffrey Furber, holds the largest position in Host Hotels and Resorts Inc (NYSE:HST). AEW Capital Management has a $122 million position in the stock, comprising 3.4% of its 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which holds a $74.8 million position; 0.1% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions comprise John Overdeck and David Siegel’s Two Sigma Advisors, Jim Simons’s Renaissance Technologies and Greg Poole’s Echo Street Capital Management.
Because Host Hotels and Resorts Inc (NYSE:HST) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there were a few funds that slashed their positions entirely last quarter. Interestingly, Brian Gustavson and Andrew Haley’s 1060 Capital Management cut the largest position of the 700 funds monitored by Insider Monkey, valued at an estimated $14.2 million in stock. Alexander Mitchell’s fund, Scopus Asset Management, also sold off its stock, about $6.8 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Host Hotels and Resorts Inc (NYSE:HST) but similarly valued. These stocks are First Republic Bank (NYSE:FRC), Fortinet Inc (NASDAQ:FTNT), Shopify Inc (NYSE:SHOP), and Comerica Incorporated (NYSE:CMA). This group of stocks’ market values resemble HST’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FRC | 23 | 724485 | 6 |
| FTNT | 28 | 1046841 | 2 |
| SHOP | 28 | 1260759 | 3 |
| CMA | 37 | 927907 | -6 |
| Average | 29 | 989998 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $990 million. That figure was $383 million in HST’s case. Comerica Incorporated (NYSE:CMA) is the most popular stock in this table. On the other hand First Republic Bank (NYSE:FRC) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Host Hotels and Resorts Inc (NYSE:HST) is even less popular than FRC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None. This article was originally published at Insider Monkey.
