While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Braemar Hotels & Resorts Inc. (NYSE:BHR).
Braemar Hotels & Resorts Inc. (NYSE:BHR) shareholders have witnessed an increase in enthusiasm from smart money of late. Braemar Hotels & Resorts Inc. (NYSE:BHR) was in 17 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 20. Our calculations also showed that BHR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Noam Gottesman of GLG Partners
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Do Hedge Funds Think BHR Is A Good Stock To Buy Now?
At the end of March, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the fourth quarter of 2020. On the other hand, there were a total of 13 hedge funds with a bullish position in BHR a year ago. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Jones Road Capital Management held the most valuable stake in Braemar Hotels & Resorts Inc. (NYSE:BHR), which was worth $6.5 million at the end of the fourth quarter. On the second spot was Leonard Green & Partners which amassed $6.1 million worth of shares. Royce & Associates, Millennium Management, 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 Jones Road Capital Management allocated the biggest weight to Braemar Hotels & Resorts Inc. (NYSE:BHR), around 2.35% of its 13F portfolio. Leonard Green & Partners is also relatively very bullish on the stock, earmarking 0.08 percent of its 13F equity portfolio to BHR.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls' herd. Leonard Green & Partners, managed by Leonard Green, created the largest position in Braemar Hotels & Resorts Inc. (NYSE:BHR). Leonard Green & Partners had $6.1 million invested in the company at the end of the quarter. Chuck Royce's Royce & Associates also initiated a $4.5 million position during the quarter. The other funds with brand new BHR positions are Noam Gottesman's GLG Partners, Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's now take a look at hedge fund activity in other stocks similar to Braemar Hotels & Resorts Inc. (NYSE:BHR). We will take a look at MediciNova, Inc. (NASDAQ:MNOV), Flexsteel Industries, Inc. (NASDAQ:FLXS), Bel Fuse, Inc. (NASDAQ:BELFB), EDAP TMS S.A. (NASDAQ:EDAP), Glory Star New Media Group Holdings Limited (NASDAQ:GSMG), Exfo Inc (NASDAQ:EXFO), and BrasilAgro - Companhia Brasileira de Propriedades Agrícolas (NYSE:LND). This group of stocks' market valuations are similar to BHR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MNOV,4,1162,0 FLXS,10,60969,-1 BELFB,8,21978,1 EDAP,8,26076,2 GSMG,8,1218,-1 EXFO,3,6744,2 LND,1,195,1 Average,6,16906,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $26 million in BHR's case. Flexsteel Industries, Inc. (NASDAQ:FLXS) is the most popular stock in this table. On the other hand BrasilAgro - Companhia Brasileira de Propriedades Agrícolas (NYSE:LND) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Braemar Hotels & Resorts Inc. (NYSE:BHR) is more popular among hedge funds. Our overall hedge fund sentiment score for BHR is 81.5. 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. 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 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Unfortunately BHR wasn't nearly as popular as these 5 stocks and hedge funds that were betting on BHR were disappointed as the stock returned -13.8% since the end of the first quarter (through 7/23) 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.