How do we determine whether Red Lion Hotels Corporation (NYSE:RLH) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Red Lion Hotels Corporation (NYSE:RLH) investors should pay attention to an increase in hedge fund sentiment lately. Our calculations also showed that RLH isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most stock holders, hedge funds are perceived as unimportant, outdated financial tools of years past. While there are over 8000 funds trading today, Our researchers hone in on the bigwigs of this group, approximately 750 funds. These hedge fund managers administer most of the hedge fund industry's total asset base, and by watching their best picks, Insider Monkey has unearthed numerous investment strategies that have historically outstripped the market. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_193003" align="alignnone" width="600"] Chuck Royce of Royce & Associates[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to go over the fresh hedge fund action surrounding Red Lion Hotels Corporation (NYSE:RLH).
Hedge fund activity in Red Lion Hotels Corporation (NYSE:RLH)
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 44% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards RLH over the last 17 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Coliseum Capital held the most valuable stake in Red Lion Hotels Corporation (NYSE:RLH), which was worth $23.7 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $6.7 million worth of shares. Rutabaga Capital Management, MFP Investors, and Manatuck Hill Partners 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 Coliseum Capital allocated the biggest weight to Red Lion Hotels Corporation (NYSE:RLH), around 6.64% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, designating 1.81 percent of its 13F equity portfolio to RLH.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Red Lion Hotels Corporation (NYSE:RLH) headfirst. Oasis Management, managed by Seth Fischer, assembled the most valuable position in Red Lion Hotels Corporation (NYSE:RLH). Oasis Management had $1.1 million invested in the company at the end of the quarter. Jeremy Carton and Gilbert Li's Alta Fundamental Advisers also made a $0.4 million investment in the stock during the quarter. The other funds with brand new RLH positions are Ken Griffin's Citadel Investment Group, Israel Englander's Millennium Management, and Arnaud Ajdler's Engine Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Red Lion Hotels Corporation (NYSE:RLH) but similarly valued. These stocks are 1st Constitution Bancorp (NJ) (NASDAQ:FCCY), Clearfield, Inc. (NASDAQ:CLFD), Cytosorbents Corp (NASDAQ:CTSO), and LiqTech International Inc (NYSE:LIQT). This group of stocks' market caps resemble RLH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FCCY,1,2359,0 CLFD,3,7848,0 CTSO,5,4663,1 LIQT,8,7582,3 Average,4.25,5613,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $48 million in RLH's case. LiqTech International Inc (NYSE:LIQT) is the most popular stock in this table. On the other hand 1st Constitution Bancorp (NJ) (NASDAQ:FCCY) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Red Lion Hotels Corporation (NYSE:RLH) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately RLH wasn't nearly as popular as these 20 stocks and hedge funds that were betting on RLH were disappointed as the stock returned -46.1% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.