As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Carnival Corporation & plc (NYSE:CUK).
Is Carnival Corporation & plc (NYSE:CUK) undervalued? The smart money was taking an optimistic view. The number of long hedge fund bets advanced by 6 recently. Carnival Corporation & plc (NYSE:CUK) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 14. Our calculations also showed that CUK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are many indicators market participants put to use to size up stocks. Some of the less known indicators are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outperform the S&P 500 by a very impressive amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website .
Nathaniel August of Mangrove Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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. Keeping this in mind we’re going to review the fresh hedge fund action regarding Carnival Corporation & plc (NYSE:CUK).
Do Hedge Funds Think CUK Is A Good Stock To Buy Now?
At the end of June, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 150% from the first quarter of 2020. By comparison, 14 hedge funds held shares or bullish call options in CUK a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, Aristeia Capital held the most valuable stake in Carnival Corporation & plc (NYSE:CUK), which was worth $206.4 million at the end of the second quarter. On the second spot was Millennium Management which amassed $10.2 million worth of shares. Mangrove Partners, Whitebox Advisors, and Scoggin 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 Aristeia Capital allocated the biggest weight to Carnival Corporation & plc (NYSE:CUK), around 4.14% of its 13F portfolio. Mangrove Partners is also relatively very bullish on the stock, earmarking 0.95 percent of its 13F equity portfolio to CUK.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Mangrove Partners, managed by Nathaniel August, established the most outsized position in Carnival Corporation & plc (NYSE:CUK). Mangrove Partners had $9.2 million invested in the company at the end of the quarter. Andy Redleaf’s Whitebox Advisors also initiated a $6.5 million position during the quarter. The other funds with brand new CUK positions are Renaissance Technologies, Curtis Schenker and Craig Effron’s Scoggin, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s go over hedge fund activity in other stocks similar to Carnival Corporation & plc (NYSE:CUK). We will take a look at Futu Holdings Limited (NASDAQ:FUTU), Tencent Music Entertainment Group (NYSE:TME), Etsy Inc (NASDAQ:ETSY), Generac Holdings Inc. (NYSE:GNRC), Slack Technologies Inc (NYSE:WORK), Hormel Foods Corporation (NYSE:HRL), and Weyerhaeuser Co. (NYSE:WY). This group of stocks’ market caps resemble CUK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FUTU | 31 | 1190137 | 5 |
| TME | 35 | 570093 | -28 |
| ETSY | 47 | 1731703 | -6 |
| GNRC | 38 | 594282 | 2 |
| WORK | 61 | 5328202 | 1 |
| HRL | 24 | 562433 | -2 |
| WY | 39 | 662871 | 1 |
| Average | 39.3 | 1519960 | -3.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.3 hedge funds with bullish positions and the average amount invested in these stocks was $1520 million. That figure was $237 million in CUK’s case. Slack Technologies Inc (NYSE:WORK) is the most popular stock in this table. On the other hand Hormel Foods Corporation (NYSE:HRL) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Carnival Corporation & plc (NYSE:CUK) is even less popular than HRL. Our overall hedge fund sentiment score for CUK is 31.4. 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 25.7% in 2021 through September 27th but managed to beat the market by 6.2 percentage points. A small number of hedge funds were also right about betting on CUK, though not to the same extent, as the stock returned 3.7% since the end of June (through September 27th) and outperformed the market as well.
Follow Carnival Plc (NYSE:CUK)
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Disclosure: None. This article was originally published at Insider Monkey.
