Legendary investors such as Jeffrey Talpins and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don't publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That's why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Chatham Lodging Trust (NYSE:CLDT) from the perspective of those elite funds.
Chatham Lodging Trust (NYSE:CLDT) investors should pay attention to an increase in enthusiasm from smart money recently. CLDT was in 8 hedge funds' portfolios at the end of the second quarter of 2019. There were 7 hedge funds in our database with CLDT positions at the end of the previous quarter. Our calculations also showed that CLDT isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are seen as slow, outdated financial vehicles of yesteryear. While there are over 8000 funds with their doors open at present, Our experts look at the bigwigs of this group, around 750 funds. These money managers command bulk of all hedge funds' total capital, and by following their finest stock picks, Insider Monkey has unearthed several investment strategies that have historically exceeded the market. Insider Monkey's flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a peek at the new hedge fund action encompassing Chatham Lodging Trust (NYSE:CLDT).
How are hedge funds trading Chatham Lodging Trust (NYSE:CLDT)?
At the end of the second quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CLDT over the last 16 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies holds the most valuable position in Chatham Lodging Trust (NYSE:CLDT). Renaissance Technologies has a $32.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Forward Management, managed by J. Alan Reid, Jr., which holds a $14.6 million position; the fund has 2.6% of its 13F portfolio invested in the stock. Some other peers that are bullish include Ken Griffin's Citadel Investment Group, John Overdeck and David Siegel's Two Sigma Advisors and Ken Fisher's Fisher Asset Management.
Consequently, some big names have jumped into Chatham Lodging Trust (NYSE:CLDT) headfirst. Millennium Management, managed by Israel Englander, established the biggest position in Chatham Lodging Trust (NYSE:CLDT). Millennium Management had $0.2 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $0.2 million position during the quarter.
Let's also examine hedge fund activity in other stocks similar to Chatham Lodging Trust (NYSE:CLDT). We will take a look at Great Southern Bancorp, Inc. (NASDAQ:GSBC), Signet Jewelers Limited (NYSE:SIG), Central Pacific Financial Corp. (NYSE:CPF), and Urstadt Biddle Properties Inc (NYSE:UBA). This group of stocks' market valuations are closest to CLDT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GSBC,8,27726,-4 SIG,17,62215,0 CPF,12,72870,-4 UBA,8,29719,0 Average,11.25,48133,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $53 million in CLDT's case. Signet Jewelers Limited (NYSE:SIG) is the most popular stock in this table. On the other hand Great Southern Bancorp, Inc. (NASDAQ:GSBC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Chatham Lodging Trust (NYSE:CLDT) is even less popular than GSBC. Hedge funds dodged a bullet by taking a bearish stance towards CLDT. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CLDT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CLDT investors were disappointed as the stock returned -2% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.