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Do Hedge Funds Love Host Hotels and Resorts Inc (HST)?

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·6 min read
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In this article you are going to find out whether hedge funds think Host Hotels and Resorts Inc (NASDAQ:HST) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Host Hotels and Resorts Inc (NASDAQ:HST) has seen a decrease in hedge fund interest of late. Host Hotels and Resorts Inc (NASDAQ:HST) was in 24 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 30. There were 25 hedge funds in our database with HST positions at the end of the first quarter. Our calculations also showed that HST isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Stuart Zimmer Zimmer Partners
Stuart Zimmer Zimmer Partners

Stuart Zimmer of Zimmer Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let's take a look at the key hedge fund action encompassing Host Hotels and Resorts Inc (NASDAQ:HST).

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

At the end of June, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HST over the last 24 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Stuart J. Zimmer's Zimmer Partners has the number one position in Host Hotels and Resorts Inc (NASDAQ:HST), worth close to $156.4 million, accounting for 2.1% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $84.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions encompass Dmitry Balyasny's Balyasny Asset Management, Renaissance Technologies and Michael Gelband's ExodusPoint Capital. In terms of the portfolio weights assigned to each position Zimmer Partners allocated the biggest weight to Host Hotels and Resorts Inc (NASDAQ:HST), around 2.1% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, earmarking 0.54 percent of its 13F equity portfolio to HST.

Due to the fact that Host Hotels and Resorts Inc (NASDAQ:HST) has witnessed bearish sentiment from hedge fund managers, it's safe to say that there exists a select few hedgies that decided to sell off their entire stakes in the second quarter. It's worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital cut the largest investment of the 750 funds tracked by Insider Monkey, comprising close to $15.6 million in stock, and Ken Heebner's Capital Growth Management was right behind this move, as the fund cut about $8.4 million worth. These transactions are interesting, as total hedge fund interest fell by 1 funds in the second quarter.

Let's go over hedge fund activity in other stocks similar to Host Hotels and Resorts Inc (NASDAQ:HST). These stocks are Williams-Sonoma, Inc. (NYSE:WSM), Weibo Corp (NASDAQ:WB), Lincoln National Corporation (NYSE:LNC), Penn National Gaming, Inc (NASDAQ:PENN), QuantumScape Corporation (NYSE:QS), Dropbox, Inc. (NASDAQ:DBX), and Medical Properties Trust, Inc. (NYSE:MPW). This group of stocks' market values resemble HST's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WSM,34,803274,5 WB,14,128195,2 LNC,30,678736,-6 PENN,40,1039146,-2 QS,26,321285,-3 DBX,39,929444,8 MPW,19,266856,-4 Average,28.9,595277,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $595 million. That figure was $347 million in HST's case. Penn National Gaming, Inc (NASDAQ:PENN) is the most popular stock in this table. On the other hand Weibo Corp (NASDAQ:WB) is the least popular one with only 14 bullish hedge fund positions. Host Hotels and Resorts Inc (NASDAQ: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 47.2. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately HST wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); HST investors were disappointed as the stock returned -1.2% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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