The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Extended Stay America Inc (NASDAQ:STAY) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Extended Stay America Inc (NASDAQ:STAY) worth your attention right now? The smart money was becoming hopeful. The number of long hedge fund positions went up by 12 recently. Extended Stay America Inc (NASDAQ:STAY) was in 30 hedge funds' portfolios at the end of June. The all time high for this statistics is 35. Our calculations also showed that STAY isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Today there are plenty of methods shareholders employ to grade their holdings. Some of the best methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the top fund managers can outpace the market by a solid amount (see the details here).
Stuart Zimmer of Zimmer Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. With all of this in mind let's analyze the latest hedge fund action regarding Extended Stay America Inc (NASDAQ:STAY).
How are hedge funds trading Extended Stay America Inc (NASDAQ:STAY)?
At second quarter's end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 67% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in STAY a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Zimmer Partners held the most valuable stake in Extended Stay America Inc (NASDAQ:STAY), which was worth $61.8 million at the end of the third quarter. On the second spot was Long Pond Capital which amassed $56.1 million worth of shares. Centerbridge Partners, Hawk Ridge Management, and Arrowstreet 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 Centerbridge Partners allocated the biggest weight to Extended Stay America Inc (NASDAQ:STAY), around 7.74% of its 13F portfolio. LDR Capital is also relatively very bullish on the stock, earmarking 5.22 percent of its 13F equity portfolio to STAY.
As industrywide interest jumped, key money managers have been driving this bullishness. Zimmer Partners, managed by Stuart J. Zimmer, assembled the most outsized position in Extended Stay America Inc (NASDAQ:STAY). Zimmer Partners had $61.8 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also made a $15.3 million investment in the stock during the quarter. The other funds with brand new STAY positions are Josh Resnick's Jericho Capital Asset Management, Jeffrey Jacobowitz's Simcoe Capital Management, and Lee Ainslie's Maverick Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Extended Stay America Inc (NASDAQ:STAY) but similarly valued. We will take a look at Nu Skin Enterprises, Inc. (NYSE:NUS), PJT Partners Inc (NYSE:PJT), Spectrum Brands Holdings, Inc. (NYSE:SPB), Principia Biopharma Inc. (NASDAQ:PRNB), AssetMark Financial Holdings, Inc. (NYSE:AMK), Cimpress plc (NASDAQ:CMPR), and Select Medical Holdings Corporation (NYSE:SEM). This group of stocks' market caps are closest to STAY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NUS,25,240249,7 PJT,21,105078,-1 SPB,26,249356,2 PRNB,26,654270,5 AMK,6,29052,2 CMPR,25,269870,6 SEM,22,93345,4 Average,21.6,234460,3.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $234 million. That figure was $354 million in STAY's case. Spectrum Brands Holdings, Inc. (NYSE:SPB) is the most popular stock in this table. On the other hand AssetMark Financial Holdings, Inc. (NYSE:AMK) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Extended Stay America Inc (NASDAQ:STAY) is more popular among hedge funds. Our overall hedge fund sentiment score for STAY is 85.7. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 23.8% in 2020 through September 14th but still managed to beat the market by 17.6 percentage points. Hedge funds were also right about betting on STAY as the stock returned 14.2% since the end of June and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.