In this article we will check out the progression of hedge fund sentiment towards Carnival Corporation & plc (NYSE:CUK) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Carnival Corporation & plc (NYSE:CUK) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 14. CUK shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 7 hedge funds in our database with CUK holdings at the end of December. Our calculations also showed that CUK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Curtis Schenker of Scoggin
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to analyze the key hedge fund action encompassing Carnival Corporation & plc (NYSE:CUK).
Do Hedge Funds Think CUK Is A Good Stock To Buy Now?
At first quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -43% from the fourth quarter of 2020. By comparison, 9 hedge funds held shares or bullish call options in CUK a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Robert Henry Lynch’s Aristeia Capital has the largest position in Carnival Corporation & plc (NYSE:CUK), worth close to $100.8 million, accounting for 2% of its total 13F portfolio. Coming in second is Scoggin, managed by Curtis Schenker and Craig Effron, which holds a $6.6 million call position; the fund has 2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism include Israel Englander’s Millennium Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors. In terms of the portfolio weights assigned to each position Scoggin allocated the biggest weight to Carnival Corporation & plc (NYSE:CUK), around 2.04% of its 13F portfolio. Aristeia Capital is also relatively very bullish on the stock, designating 1.96 percent of its 13F equity portfolio to CUK.
Seeing as Carnival Corporation & plc (NYSE:CUK) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds that elected to cut their entire stakes in the first quarter. At the top of the heap, Renaissance Technologies sold off the biggest stake of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $7.6 million in stock. D. E. Shaw’s fund, D E Shaw, also sold off its stock, about $7.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds in the first quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Carnival Corporation & plc (NYSE:CUK) but similarly valued. We will take a look at Maxim Integrated Products Inc. (NASDAQ:MXIM), DraftKings Inc. (NASDAQ:DKNG), Arthur J. Gallagher & Co. (NYSE:AJG), Nasdaq, Inc. (NASDAQ:NDAQ), The Clorox Company (NYSE:CLX), AmerisourceBergen Corporation (NYSE:ABC), and ZTO Express (Cayman) Inc. (NYSE:ZTO). This group of stocks’ market caps match CUK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MXIM | 55 | 3238393 | 1 |
| DKNG | 43 | 966256 | -5 |
| AJG | 24 | 283959 | 0 |
| NDAQ | 22 | 236137 | -5 |
| CLX | 38 | 1195544 | -1 |
| ABC | 43 | 1177164 | -4 |
| ZTO | 15 | 659779 | -2 |
| Average | 34.3 | 1108176 | -2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.3 hedge funds with bullish positions and the average amount invested in these stocks was $1108 million. That figure was $105 million in CUK’s case. Maxim Integrated Products Inc. (NASDAQ:MXIM) is the most popular stock in this table. On the other hand ZTO Express (Cayman) Inc. (NYSE:ZTO) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Carnival Corporation & plc (NYSE:CUK) is even less popular than ZTO. Our overall hedge fund sentiment score for CUK is 10.6. 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. Hedge funds clearly dropped the ball on CUK as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on CUK as the stock returned 16.2% since Q1 (through June 11th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
