At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Ryman Hospitality Properties, Inc. (NYSE:RHP).
Ryman Hospitality Properties, Inc. (NYSE:RHP) was in 26 hedge funds' portfolios at the end of the first quarter of 2020. RHP investors should be aware of a decrease in hedge fund interest of late. There were 30 hedge funds in our database with RHP holdings at the end of the previous quarter. Our calculations also showed that RHP isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_747408" align="aligncenter" width="392"] Paul Reeder of PAR Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's take a glance at the new hedge fund action encompassing Ryman Hospitality Properties, Inc. (NYSE:RHP).
Hedge fund activity in Ryman Hospitality Properties, Inc. (NYSE:RHP)
Heading into the second quarter of 2020, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the fourth quarter of 2019. On the other hand, there were a total of 18 hedge funds with a bullish position in RHP a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, GAMCO Investors held the most valuable stake in Ryman Hospitality Properties, Inc. (NYSE:RHP), which was worth $80.7 million at the end of the third quarter. On the second spot was Eminence Capital which amassed $65.6 million worth of shares. Long Pond Capital, Newtyn Management, and Water Street Capital 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 1060 Capital Management allocated the biggest weight to Ryman Hospitality Properties, Inc. (NYSE:RHP), around 8.99% of its 13F portfolio. Newtyn Management is also relatively very bullish on the stock, setting aside 5.24 percent of its 13F equity portfolio to RHP.
Judging by the fact that Ryman Hospitality Properties, Inc. (NYSE:RHP) has faced declining sentiment from the aggregate hedge fund industry, it's safe to say that there lies a certain "tier" of fund managers who were dropping their entire stakes by the end of the first quarter. Intriguingly, Dmitry Balyasny's Balyasny Asset Management dropped the largest stake of the "upper crust" of funds followed by Insider Monkey, valued at about $28.5 million in stock, and Brandon Haley's Holocene Advisors was right behind this move, as the fund sold off about $10.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 4 funds by the end of the first quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Ryman Hospitality Properties, Inc. (NYSE:RHP) but similarly valued. These stocks are ESCO Technologies Inc. (NYSE:ESE), South State Corporation (NASDAQ:SSB), Alamos Gold Inc (NYSE:AGI), and Washington Real Estate Investment Trust (NYSE:WRE). This group of stocks' market valuations match RHP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ESE,8,59966,-1 SSB,12,77340,-3 AGI,19,234083,3 WRE,5,90460,-4 Average,11,115462,-1.25 [/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 $115 million. That figure was $267 million in RHP's case. Alamos Gold Inc (NYSE:AGI) is the most popular stock in this table. On the other hand Washington Real Estate Investment Trust (NYSE:WRE) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Ryman Hospitality Properties, Inc. (NYSE:RHP) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately RHP wasn't nearly as popular as these 10 stocks and hedge funds that were betting on RHP were disappointed as the stock returned -4.7% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.