We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Ryman Hospitality Properties, Inc. (NYSE:RHP).
Ryman Hospitality Properties, Inc. (NYSE:RHP) has experienced an increase in enthusiasm from smart money in recent months. RHP was in 21 hedge funds’ portfolios at the end of June. There were 18 hedge funds in our database with RHP positions at the end of the previous quarter. Our calculations also showed that RHP isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the fresh hedge fund action surrounding Ryman Hospitality Properties, Inc. (NYSE:RHP).
What does smart money think about Ryman Hospitality Properties, Inc. (NYSE:RHP)?
At Q2’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in RHP 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 Ryman Hospitality Properties, Inc. (NYSE:RHP) was held by GAMCO Investors, which reported holding $211.5 million worth of stock at the end of March. It was followed by Water Street Capital with a $41.3 million position. Other investors bullish on the company included Millennium Management, Renaissance Technologies, and GLG Partners.
As industrywide interest jumped, some big names were breaking ground themselves. Waterfront Capital Partners, managed by Eduardo Abush, assembled the largest position in Ryman Hospitality Properties, Inc. (NYSE:RHP). Waterfront Capital Partners had $8.7 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $1.7 million position during the quarter. The following funds were also among the new RHP investors: Roger Ibbotson’s Zebra Capital Management, Michael Gelband’s ExodusPoint Capital, and Matthew Tewksbury’s Stevens Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Ryman Hospitality Properties, Inc. (NYSE:RHP). We will take a look at Lumentum Holdings Inc (NASDAQ:LITE), Wintrust Financial Corporation (NASDAQ:WTFC), Repligen Corporation (NASDAQ:RGEN), and Service Properties Trust (NASDAQ:HPT). All of these stocks’ market caps are closest to RHP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LITE | 30 | 341777 | -1 |
| WTFC | 23 | 394159 | 0 |
| RGEN | 22 | 167527 | 2 |
| HPT | 13 | 58292 | 2 |
| Average | 22 | 240439 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $240 million. That figure was $408 million in RHP’s case. Lumentum Holdings Inc (NASDAQ:LITE) is the most popular stock in this table. On the other hand Service Properties Trust (NASDAQ:HPT) is the least popular one with only 13 bullish hedge fund positions. Ryman Hospitality Properties, Inc. (NYSE:RHP) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on RHP, though not to the same extent, as the stock returned 2% during the third quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
