The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 730 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of June 28th, 2019. What do these smart investors think about Summit Hotel Properties Inc (NYSE:INN)?
Is Summit Hotel Properties Inc (NYSE:INN) ready to rally soon? The best stock pickers are getting more optimistic. The number of bullish hedge fund bets advanced by 2 recently. Our calculations also showed that INN 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
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 go over the key hedge fund action regarding Summit Hotel Properties Inc (NYSE:INN).
What does smart money think about Summit Hotel Properties Inc (NYSE:INN)?
Heading into the third quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the first quarter of 2019. By comparison, 10 hedge funds held shares or bullish call options in INN a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Summit Hotel Properties Inc (NYSE:INN), with a stake worth $5.2 million reported as of the end of March. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $2 million. Two Sigma Advisors, Millennium Management, and Highland Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, some big names were breaking ground themselves. Laurion Capital Management, managed by Benjamin A. Smith, established the biggest position in Summit Hotel Properties Inc (NYSE:INN). Laurion Capital Management had $0.6 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are David Harding's Winton Capital Management and Mario Gabelli's GAMCO Investors.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Summit Hotel Properties Inc (NYSE:INN) but similarly valued. We will take a look at Rubius Therapeutics, Inc. (NASDAQ:RUBY), Carbon Black, Inc. (NASDAQ:CBLK), Twin River Worldwide Holdings Inc. (NYSE:TRWH), and Brookline Bancorp, Inc. (NASDAQ:BRKL). All of these stocks' market caps are similar to INN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RUBY,5,21538,0 CBLK,17,109220,-2 TRWH,14,255799,4 BRKL,8,51964,-1 Average,11,109630,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $13 million in INN's case. Carbon Black, Inc. (NASDAQ:CBLK) is the most popular stock in this table. On the other hand Rubius Therapeutics, Inc. (NASDAQ:RUBY) is the least popular one with only 5 bullish hedge fund positions. Summit Hotel Properties Inc (NYSE:INN) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on INN, though not to the same extent, as the stock returned 2.8% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.