Is Red Lion Hotels Corporation (RLH) Going to Burn These Hedge Funds?

Red Lion Hotels Corporation (NYSE:RLH) was in 4 hedge funds’ portfolio at the end of December. RLH has experienced an increase in activity from the world’s largest hedge funds of late. There were 2 hedge funds in our database with RLH positions at the end of the previous quarter.

In the eyes of most stock holders, hedge funds are assumed to be underperforming, old financial tools of the past. While there are over 8000 funds in operation today, we at Insider Monkey hone in on the elite of this club, close to 450 funds. It is estimated that this group controls the lion’s share of the smart money’s total asset base, and by keeping an eye on their top picks, we have formulated a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (see the details here).

Just as important, optimistic insider trading sentiment is a second way to break down the world of equities. Just as you’d expect, there are a variety of stimuli for an executive to get rid of shares of his or her company, but just one, very clear reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this method if investors understand what to do (learn more here).

Keeping this in mind, it’s important to take a glance at the latest action surrounding Red Lion Hotels Corporation (NYSE:RLH).

How have hedgies been trading Red Lion Hotels Corporation (NYSE:RLH)?

In preparation for this year, a total of 4 of the hedge funds we track were long in this stock, a change of 100% from the third quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially.

As aggregate interest increased, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, established the biggest position in Red Lion Hotels Corporation (NYSE:RLH). Citadel Investment Group had 0.2 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.1 million investment in the stock during the quarter.

How are insiders trading Red Lion Hotels Corporation (NYSE:RLH)?

Bullish insider trading is at its handiest when the company in focus has experienced transactions within the past half-year. Over the latest 180-day time frame, Red Lion Hotels Corporation (NYSE:RLH) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Red Lion Hotels Corporation (NYSE:RLH). These stocks are Home Inns & Hotels Management Inc. (ADR) (NASDAQ:HMIN), Orient-Express Hotels Ltd. (NYSE:OEH), China Lodging Group, Ltd (ADR) (NASDAQ:HTHT), 7 DAYS GROUP HOLDINGS LIMITED(ADR) (NYSE:SVN), and Morgans Hotel Group Co. (NASDAQ:MHGC). This group of stocks belong to the lodging industry and their market caps resemble RLH’s market cap.

With the results shown by Insider Monkey’s research, retail investors must always pay attention to hedge fund and insider trading sentiment, and Red Lion Hotels Corporation (NYSE:RLH) is an important part of this process.

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