At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Host Hotels and Resorts Inc (NYSE:HST) at the end of the second quarter and determine whether the smart money was really smart about this stock.
Host Hotels and Resorts Inc (NYSE:HST) has experienced an increase in support from the world's most elite money managers lately. Host Hotels and Resorts Inc (NYSE:HST) was in 29 hedge funds' portfolios at the end of June. The all time high for this statistics is 30. There were 24 hedge funds in our database with HST holdings at the end of March. Our calculations also showed that HST 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.
According to most traders, hedge funds are perceived as unimportant, old financial tools of years past. While there are more than 8000 funds trading at the moment, Our experts look at the upper echelon of this group, around 850 funds. It is estimated that this group of investors orchestrate bulk of all hedge funds' total capital, and by keeping track of their first-class equity investments, Insider Monkey has spotted a number of investment strategies that have historically exceeded the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Larry Robbins of Glenview Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. 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. Now we're going to take a look at the key hedge fund action regarding Host Hotels and Resorts Inc (NYSE:HST).
Hedge fund activity in Host Hotels and Resorts Inc (NYSE:HST)
At the end of the second quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HST over the last 20 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Echo Street Capital Management was the largest shareholder of Host Hotels and Resorts Inc (NYSE:HST), with a stake worth $39.5 million reported as of the end of September. Trailing Echo Street Capital Management was Long Pond Capital, which amassed a stake valued at $27.9 million. D E Shaw, Two Sigma Advisors, and Marshall Wace LLP 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 Long Pond Capital allocated the biggest weight to Host Hotels and Resorts Inc (NYSE:HST), around 1.1% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, designating 0.85 percent of its 13F equity portfolio to HST.
With a general bullishness amongst the heavyweights, some big names have jumped into Host Hotels and Resorts Inc (NYSE:HST) headfirst. Long Pond Capital, managed by John Khoury, initiated the most valuable position in Host Hotels and Resorts Inc (NYSE:HST). Long Pond Capital had $27.9 million invested in the company at the end of the quarter. Daniel Sundheim's D1 Capital Partners also initiated a $10.1 million position during the quarter. The other funds with brand new HST positions are Larry Robbins's Glenview Capital, Donald Sussman's Paloma Partners, and Daniel Johnson's Gillson Capital.
Let's check out hedge fund activity in other stocks similar to Host Hotels and Resorts Inc (NYSE:HST). We will take a look at A. O. Smith Corporation (NYSE:AOS), Juniper Networks, Inc. (NYSE:JNPR), ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), Perrigo Company plc (NYSE:PRGO), GCI Liberty, Inc. (NASDAQ:GLIBA), Snap-on Incorporated (NYSE:SNA), and Trex Company, Inc. (NYSE:TREX). This group of stocks' market values are closest to HST's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AOS,35,410037,10 JNPR,33,558592,-1 ACAD,44,2839807,16 PRGO,33,446972,5 GLIBA,53,2178205,4 SNA,20,358773,-6 TREX,28,221918,11 Average,35.1,1002043,5.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.1 hedge funds with bullish positions and the average amount invested in these stocks was $1002 million. That figure was $221 million in HST's case. GCI Liberty, Inc. (NASDAQ:GLIBA) is the most popular stock in this table. On the other hand Snap-on Incorporated (NYSE:SNA) is the least popular one with only 20 bullish hedge fund positions. Host Hotels and Resorts Inc (NYSE:HST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HST is 52.6. 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 gained 23.8% in 2020 through September 14th and still beat the market by 17.6 percentage points. A small number of hedge funds were also right about betting on HST as the stock returned 10.5% since the end of June (through September 14th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.