1. Hilton Worldwide Holdings Inc. (NYSE:HLT)
Number of Hedge Fund Holders as of Q2: 64
Pershing Square’s Equity Stake: $1.95 Billion
Hilton Worldwide Holdings Inc. (NYSE:HLT) is the biggest holding in Bill Ackman’s stock portfolio, offering exposure to the hospitality sector. The company manages the franchising and leasing of hotels and resorts. While Ackman invested in the company first in 2016, he has grown his stakes to worth $1.9 billion.
Its edge as one of Ackman’s top stock holdings stems from its robust portfolio of 24 brands and over 7,600 hotels. Hilton benefits from its scale in several ways. It spends a lot of money on marketing, offering perks to consumers, and running a sizable loyalty program. With almost 190 million members, the Hilton program appeals to hotel operators, allowing Hilton Worldwide Holdings Inc. (NYSE:HLT) to allocate more funds for loyalty initiatives.
Over the past few years, Hilton has greatly increased the scope of its offerings and recovered well from the travel industry slowdown caused by the pandemic. Revenue is predicted to increase by 2% to 4% per available room in 2024 as it grows. Hilton Worldwide Holdings Inc. (NYSE:HLT)’s ongoing room additions should result in double-digit revenue growth overall.
The hotel chain’s revenue per available room (rear) is increasing; in the first half of 2024, total revenue increased by 12% to $5.5 billion. Hilton continues to benefit from expanding the travel and tourism industries, so HLT stock should continue to rise.
The company delivered solid second-quarter results, with diluted earnings per share increasing 17% year over year to $1.91 on adjusted earnings of $917 million. Analysts expect Hilton Worldwide Holdings Inc. (NYSE:HLT) to demonstrate resilience despite a general slowdown in global revenue per available room because of its high mix of franchise fees and reduced exposure to internationally sensitive macroeconomic markets.
Insider Monkey saw that 64 hedge funds out of the 912 hedge funds held stakes in Hilton Worldwide Holdings Inc. (NYSE:HLT) as of the end of 2Q 2024.
Pershing Square Holdings, an investment holding company, released its Q2 2024 investor letter. This mentions Hilton Worldwide Holdings Inc. (NYSE:HLT). Here is what the fund said:
“In the first half of 2024, Hilton Worldwide Holdings Inc. (NYSE:HLT) generated strong revenue growth as the lodging industry experienced solid global demand against a favorable supply backdrop. Near-term industry trends remain positive, with continued strong international growth, improving business transient demand and extremely robust group demand, which is poised to sequentially accelerate in the third quarter. Leisure travel continued to moderate from the high levels of recent years following the COVID-19 reopening.
In the second quarter, HLT’s revenue per room (“RevPAR”), the industry metric for same-store sales, increased 3.5% as compared to 2023. Combined with strong 6% net unit growth, aggregate fee revenues grew 10%. Earnings per share grew 17% year-over-year, benefiting from Hilton’s excellent cost control and continued best-in-class capital return. Reflecting an incrementally challenging macroeconomic picture, principally in China, the company slightly reduced the upper end of their prior RevPAR guidance, now estimated by management to be +2% to +3%, while modestly increasing full year’s earnings guidance…” (Click here to read the full text)
While we acknowledge the potential of HLT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than HLT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
