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Here is What Hedge Funds Think About Xenia Hotels & Resorts Inc (XHR)

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Xenia Hotels & Resorts Inc (NYSE:XHR).

Xenia Hotels & Resorts Inc (NYSE:XHR) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds' portfolios at the end of the first quarter of 2021. Our calculations also showed that XHR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Paramount Group Inc (NYSE:PGRE), Azul S.A. (NYSE:AZUL), and TowneBank (NASDAQ:TOWN) to gather more data points.

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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Brian Gustavson of 1060 Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. Keeping this in mind let's view the latest hedge fund action encompassing Xenia Hotels & Resorts Inc (NYSE:XHR).

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

At the end of March, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards XHR over the last 23 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Millennium Management held the most valuable stake in Xenia Hotels & Resorts Inc (NYSE:XHR), which was worth $2.8 million at the end of the fourth quarter. On the second spot was Two Sigma Advisors which amassed $1.9 million worth of shares. 1060 Capital Management, Arrowstreet Capital, and Citadel Investment Group 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 0 allocated the biggest weight to Xenia Hotels & Resorts Inc (NYSE:XHR), around 2.13% of its 13F portfolio. 0 is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to XHR.

Judging by the fact that Xenia Hotels & Resorts Inc (NYSE:XHR) has witnessed a decline in interest from the entirety of the hedge funds we track, it's safe to say that there is a sect of funds that slashed their entire stakes in the first quarter. Intriguingly, Renaissance Technologies sold off the largest investment of the "upper crust" of funds monitored by Insider Monkey, comprising close to $1.9 million in stock, and D. E. Shaw's D E Shaw was right behind this move, as the fund said goodbye to about $1.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Xenia Hotels & Resorts Inc (NYSE:XHR) but similarly valued. These stocks are Paramount Group Inc (NYSE:PGRE), Azul S.A. (NYSE:AZUL), TowneBank (NASDAQ:TOWN), AMC Networks Inc (NASDAQ:AMCX), Brandywine Realty Trust (NYSE:BDN), Mueller Water Products, Inc. (NYSE:MWA), and Glu Mobile Inc. (NASDAQ:GLUU). This group of stocks' market caps match XHR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PGRE,17,135595,-1 AZUL,11,69381,-6 TOWN,9,43368,1 AMCX,22,221973,1 BDN,12,55160,0 MWA,20,288892,0 GLUU,34,414801,4 Average,17.9,175596,-0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $176 million. That figure was $9 million in XHR's case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand TowneBank (NASDAQ:TOWN) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Xenia Hotels & Resorts Inc (NYSE:XHR) is even less popular than TOWN. Our overall hedge fund sentiment score for XHR is 16.3. 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. Hedge funds dodged a bullet by taking a bearish stance towards XHR. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th but managed to beat the market again by 4.8 percentage points. Unfortunately XHR wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); XHR investors were disappointed as the stock returned -1.7% since the end of the first quarter (through 6/25) 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 since 2019.

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