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Is APLE A Good Stock To Buy Now?

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Reymerlyn Martin
·6 min read
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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Apple Hospitality REIT Inc (NYSE:APLE).

Is APLE a good stock to buy now? Apple Hospitality REIT Inc (NYSE:APLE) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that APLE 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 APLE to other stocks including Applied Industrial Technologies Inc (NYSE:AIT), Copa Holdings, S.A. (NYSE:CPA), and Arcosa, Inc. (NYSE:ACA) to get a better sense of its popularity.

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

In today’s marketplace there are several tools investors have at their disposal to analyze publicly traded companies. Two of the most innovative tools are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the top investment managers can trounce their index-focused peers by a significant margin (see the details here).

Michael Weinstock - Monarch Alternative Capital
Michael Weinstock - Monarch Alternative 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. With all of this in mind let's check out the key hedge fund action surrounding Apple Hospitality REIT Inc (NYSE:APLE).

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

Heading into the fourth quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in APLE over the last 21 quarters. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Apple Hospitality REIT Inc (NYSE:APLE), which was worth $31.2 million at the end of the third quarter. On the second spot was Land & Buildings Investment Management which amassed $15.2 million worth of shares. V3 Capital, Millennium Management, and Monarch Alternative 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 Land & Buildings Investment Management allocated the biggest weight to Apple Hospitality REIT Inc (NYSE:APLE), around 2.78% of its 13F portfolio. V3 Capital is also relatively very bullish on the stock, designating 2.4 percent of its 13F equity portfolio to APLE.

Since Apple Hospitality REIT Inc (NYSE:APLE) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of hedgies that elected to cut their full holdings heading into Q4. At the top of the heap, Schonfeld Strategic Advisors dumped the largest stake of the "upper crust" of funds followed by Insider Monkey, worth about $0.5 million in stock. John Overdeck and David Siegel's fund, Two Sigma Advisors, also dumped its stock, about $0.4 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 now take a look at hedge fund activity in other stocks similar to Apple Hospitality REIT Inc (NYSE:APLE). These stocks are Applied Industrial Technologies Inc (NYSE:AIT), Copa Holdings, S.A. (NYSE:CPA), Arcosa, Inc. (NYSE:ACA), SunPower Corporation (NASDAQ:SPWR), Mesoblast Limited (NASDAQ:MESO), iRobot Corporation (NASDAQ:IRBT), and Zymeworks Inc. (NYSE:ZYME). This group of stocks' market values are closest to APLE's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AIT,24,63259,9 CPA,24,203185,0 ACA,19,169792,3 SPWR,14,91257,-2 MESO,3,2921,0 IRBT,25,162591,3 ZYME,29,748757,-2 Average,19.7,205966,1.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.7 hedge funds with bullish positions and the average amount invested in these stocks was $206 million. That figure was $79 million in APLE's case. Zymeworks Inc. (NYSE:ZYME) is the most popular stock in this table. On the other hand Mesoblast Limited (NASDAQ:MESO) is the least popular one with only 3 bullish hedge fund positions. Apple Hospitality REIT Inc (NYSE:APLE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for APLE is 54.2. 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. A small number of hedge funds were also right about betting on APLE as the stock returned 34% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.

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

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