Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Travel + Leisure Co. (NYSE:TNL) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Travel + Leisure Co. (NYSE:TNL) has seen an increase in enthusiasm from smart money of late. Travel + Leisure Co. (NYSE:TNL) was in 33 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 34. Our calculations also showed that TNL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s take a peek at the new hedge fund action encompassing Travel + Leisure Co. (NYSE:TNL).
Stuart Zimmer of Zimmer Partners
Do Hedge Funds Think TNL Is A Good Stock To Buy Now?
At third quarter’s end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the second quarter of 2021. By comparison, 29 hedge funds held shares or bullish call options in TNL a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Rima Senvest Management was the largest shareholder of Travel + Leisure Co. (NYSE:TNL), with a stake worth $118.8 million reported as of the end of September. Trailing Rima Senvest Management was Iridian Asset Management, which amassed a stake valued at $114 million. Zimmer Partners, Long Pond Capital, and Nantahala Capital Management 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 MIK Capital allocated the biggest weight to Travel + Leisure Co. (NYSE:TNL), around 6.09% of its 13F portfolio. Solel Partners is also relatively very bullish on the stock, earmarking 4.96 percent of its 13F equity portfolio to TNL.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Zimmer Partners, managed by Stuart J. Zimmer, assembled the largest position in Travel + Leisure Co. (NYSE:TNL). Zimmer Partners had $105 million invested in the company at the end of the quarter. John Khoury’s Long Pond Capital also initiated a $80.9 million position during the quarter. The other funds with new positions in the stock are Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, Christopher Hillary’s Roubaix Capital, and James Thomas Berylson’s Berylson Capital Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Travel + Leisure Co. (NYSE:TNL) but similarly valued. We will take a look at Atotech Limited (NYSE:ATC), United Bankshares, Inc. (NASDAQ:UBSI), Adagio Therapeutics Inc. (NASDAQ:ADGI), Balchem Corporation (NASDAQ:BCPC), Sendas Distribuidora S.A. (NYSE:ASAI), 51job, Inc. (NASDAQ:JOBS), and National Storage Affiliates Trust (NYSE:NSA). This group of stocks’ market caps are closest to TNL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATC | 24 | 268299 | 1 |
| UBSI | 14 | 31128 | 5 |
| ADGI | 12 | 612999 | 12 |
| BCPC | 14 | 52824 | -1 |
| ASAI | 4 | 12500 | -3 |
| JOBS | 19 | 607968 | 1 |
| NSA | 21 | 218562 | 1 |
| Average | 15.4 | 257754 | 2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $258 million. That figure was $741 million in TNL’s case. Atotech Limited (NYSE:ATC) is the most popular stock in this table. On the other hand Sendas Distribuidora S.A. (NYSE:ASAI) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Travel + Leisure Co. (NYSE:TNL) is more popular among hedge funds. Our overall hedge fund sentiment score for TNL is 87.1. 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 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on TNL as the stock returned 4.9% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
Follow Travel & Leisure Co. (NYSE:TNL)
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Disclosure: None. This article was originally published at Insider Monkey.
