Where Do Hedge Funds Stand On Hersha Hospitality Trust (HT)?

In this article we will take a look at whether hedge funds think Hersha Hospitality Trust (NYSE:HT) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Hedge fund interest in Hersha Hospitality Trust (NYSE:HT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that HT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare HT to other stocks including LogicBio Therapeutics, Inc. (NASDAQ:LOGC), Fathom Holdings Inc. (NASDAQ:FTHM), and Haynes International, Inc. (NASDAQ:HAYN) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let’s analyze the key hedge fund action regarding Hersha Hospitality Trust (NYSE:HT).

Do Hedge Funds Think HT Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HT over the last 21 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

Among these funds, 1060 Capital Management held the most valuable stake in Hersha Hospitality Trust (NYSE:HT), which was worth $3.3 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $2 million worth of shares. D E Shaw, Millennium Management, and Intrinsic Edge Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position 1060 Capital Management allocated the biggest weight to Hersha Hospitality Trust (NYSE:HT), around 5.53% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, dishing out 0.1 percent of its 13F equity portfolio to HT.

Seeing as Hersha Hospitality Trust (NYSE:HT) has witnessed falling interest from the smart money, we can see that there were a few funds that slashed their entire stakes last quarter. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the largest investment of the 750 funds followed by Insider Monkey, worth an estimated $0.7 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also dumped its stock, about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Hersha Hospitality Trust (NYSE:HT) but similarly valued. We will take a look at LogicBio Therapeutics, Inc. (NASDAQ:LOGC), Fathom Holdings Inc. (NASDAQ:FTHM), Haynes International, Inc. (NASDAQ:HAYN), Alico, Inc. (NASDAQ:ALCO), PennantPark Investment Corp. (NASDAQ:PNNT), MICT, Inc. (NASDAQ:MICT), and Commercial Vehicle Group, Inc. (NASDAQ:CVGI). This group of stocks’ market valuations match HT’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.9 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $14 million in HT’s case. Haynes International, Inc. (NASDAQ:HAYN) is the most popular stock in this table. On the other hand MICT, Inc. (NASDAQ:MICT) is the least popular one with only 2 bullish hedge fund positions. Hersha Hospitality Trust (NYSE:HT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HT is 69.2. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on HT as the stock returned 59.7% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.