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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 Wyndham Hotels & Resorts, Inc. (NYSE:WH) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Wyndham Hotels & Resorts, Inc. (NYSE:WH) investors should pay attention to an increase in hedge fund interest lately. Wyndham Hotels & Resorts, Inc. (NYSE:WH) was in 36 hedge funds' portfolios at the end of June. The all time high for this statistics is 44. Our calculations also showed that WH 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.
At the moment there are many metrics stock market investors use to evaluate their holdings. Two of the most innovative metrics are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat the market by a significant amount (see the details here).
Jeffrey Gates of Gates 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 precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are also checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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 let's take a gander at the key hedge fund action regarding Wyndham Hotels & Resorts, Inc. (NYSE:WH).
How are hedge funds trading Wyndham Hotels & Resorts, Inc. (NYSE:WH)?
At the end of the second quarter, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the first quarter of 2020. By comparison, 40 hedge funds held shares or bullish call options in WH a year ago. With hedgies' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Long Pond Capital held the most valuable stake in Wyndham Hotels & Resorts, Inc. (NYSE:WH), which was worth $94.5 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $84.7 million worth of shares. Gates Capital Management, Tremblant Capital, and Echo Street Capital Management 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 Solel Partners allocated the biggest weight to Wyndham Hotels & Resorts, Inc. (NYSE:WH), around 12.68% of its 13F portfolio. Impactive Capital is also relatively very bullish on the stock, earmarking 11.02 percent of its 13F equity portfolio to WH.
Consequently, key money managers have jumped into Wyndham Hotels & Resorts, Inc. (NYSE:WH) headfirst. Scopus Asset Management, managed by Alexander Mitchell, initiated the most outsized position in Wyndham Hotels & Resorts, Inc. (NYSE:WH). Scopus Asset Management had $32 million invested in the company at the end of the quarter. Anand Parekh's Alyeska Investment Group also made a $29.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny's Balyasny Asset Management, Josh Resnick's Jericho Capital Asset Management, and Renaissance Technologies.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Wyndham Hotels & Resorts, Inc. (NYSE:WH) but similarly valued. These stocks are Huntsman Corporation (NYSE:HUN), Qurate Retail, Inc. (NASDAQ:QRTEA), BridgeBio Pharma, Inc. (NASDAQ:BBIO), Healthcare Realty Trust Inc (NYSE:HR), JBG SMITH Properties (NYSE:JBGS), Eldorado Resorts Inc (NASDAQ:ERI), and Hawaiian Electric Industries, Inc. (NYSE:HE). This group of stocks' market valuations are similar to WH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HUN,25,354992,4 QRTEA,43,743396,11 BBIO,14,1341110,2 HR,22,155771,11 JBGS,25,283097,5 ERI,49,733973,10 HE,16,159237,3 Average,27.7,538797,6.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.7 hedge funds with bullish positions and the average amount invested in these stocks was $539 million. That figure was $760 million in WH's case. Eldorado Resorts Inc (NASDAQ:ERI) is the most popular stock in this table. On the other hand BridgeBio Pharma, Inc. (NASDAQ:BBIO) is the least popular one with only 14 bullish hedge fund positions. Wyndham Hotels & Resorts, Inc. (NYSE:WH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WH is 66. 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 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Hedge funds were also right about betting on WH as the stock returned 22.9% since Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.