The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider Sunstone Hotel Investors Inc (NYSE:SHO) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is SHO a good stock to buy? Investors who are in the know were betting on the stock. The number of long hedge fund positions improved by 1 lately. Sunstone Hotel Investors Inc (NYSE:SHO) was in 17 hedge funds’ portfolios at the end of March. The all time high for this statistic is 25. Our calculations also showed that SHO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ken Heebner of Capital Growth Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a look at the key hedge fund action surrounding Sunstone Hotel Investors Inc (NYSE:SHO).
Do Hedge Funds Think SHO Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in SHO a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Sunstone Hotel Investors Inc (NYSE:SHO) was held by Citadel Investment Group, which reported holding $36.8 million worth of stock at the end of December. It was followed by Capital Growth Management with a $25.4 million position. Other investors bullish on the company included Waterfront Capital Partners, Echo Street Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Capital Growth Management allocated the biggest weight to Sunstone Hotel Investors Inc (NYSE:SHO), around 2.32% of its 13F portfolio. AltraVue Capital is also relatively very bullish on the stock, dishing out 1.95 percent of its 13F equity portfolio to SHO.
As aggregate interest increased, some big names have jumped into Sunstone Hotel Investors Inc (NYSE:SHO) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the biggest position in Sunstone Hotel Investors Inc (NYSE:SHO). Arrowstreet Capital had $7 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $0.3 million investment in the stock during the quarter. The following funds were also among the new SHO investors: Alec Litowitz and Ross Laser’s Magnetar Capital, Donald Sussman’s Paloma Partners, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s now review hedge fund activity in other stocks similar to Sunstone Hotel Investors Inc (NYSE:SHO). These stocks are Nu Skin Enterprises, Inc. (NYSE:NUS), Sanmina Corporation (NASDAQ:SANM), Rush Enterprises, Inc. (NASDAQ:RUSHA), Harmony Gold Mining Company Limited (NYSE:HMY), Evertec Inc (NYSE:EVTC), The Cheesecake Factory Incorporated (NASDAQ:CAKE), and Range Resources Corp. (NYSE:RRC). This group of stocks’ market valuations are closest to SHO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NUS | 19 | 327670 | -3 |
| SANM | 16 | 156709 | -3 |
| RUSHA | 17 | 78465 | 0 |
| HMY | 8 | 93178 | -2 |
| EVTC | 21 | 217187 | -1 |
| CAKE | 18 | 172335 | 0 |
| RRC | 26 | 415439 | 1 |
| Average | 17.9 | 208712 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $209 million. That figure was $122 million in SHO’s case. Range Resources Corp. (NYSE:RRC) is the most popular stock in this table. On the other hand Harmony Gold Mining Company Limited (NYSE:HMY) is the least popular one with only 8 bullish hedge fund positions. Sunstone Hotel Investors Inc (NYSE:SHO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SHO is 51.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately SHO wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SHO investors were disappointed as the stock returned -7.7% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Sunstone Hotel Investors Inc. (NYSE:SHO)
Follow Sunstone Hotel Investors Inc. (NYSE:SHO)
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Disclosure: None. This article was originally published at Insider Monkey.
