The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Carnival Corporation & Plc (NYSE:CUK).
Carnival Corporation & Plc (NYSE:CUK) was in 9 hedge funds’ portfolios at the end of March. CUK investors should pay attention to a decrease in enthusiasm from smart money of late. There were 14 hedge funds in our database with CUK positions at the end of the previous quarter. Our calculations also showed that CUK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, We take a look at lists like the 10 stocks that went up during the 2008 crash to identify the companies that are likely to deliver double digit returns in up and down markets. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to view the new hedge fund action encompassing Carnival Corporation & Plc (NYSE:CUK).
What have hedge funds been doing with Carnival Corporation & Plc (NYSE:CUK)?
Heading into the second quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -36% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CUK over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the number one position in Carnival Corporation & Plc (NYSE:CUK), worth close to $16.2 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, which holds a $7.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism contain D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Arrowstreet Capital allocated the biggest weight to Carnival Corporation & Plc (NYSE:CUK), around 0.05% of its 13F portfolio. Hudson Bay Capital Management is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to CUK.
Since Carnival Corporation & Plc (NYSE:CUK) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there exists a select few funds that decided to sell off their positions entirely heading into Q4. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the biggest stake of the “upper crust” of funds tracked by Insider Monkey, totaling close to $10.1 million in stock, and Shane Finemore’s Manikay Partners was right behind this move, as the fund sold off about $5.3 million worth. These moves are important to note, as total hedge fund interest fell by 5 funds heading into Q4.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Carnival Corporation & Plc (NYSE:CUK) but similarly valued. These stocks are Banco de Chile (NYSE:BCH), Catalent Inc (NYSE:CTLT), Citizens Financial Group Inc (NYSE:CFG), and Shaw Communications Inc (NYSE:SJR). All of these stocks’ market caps are similar to CUK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BCH | 4 | 34819 | -6 |
| CTLT | 27 | 384560 | 6 |
| CFG | 46 | 828393 | 4 |
| SJR | 12 | 152105 | 0 |
| Average | 22.25 | 349969 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $350 million. That figure was $41 million in CUK’s case. Citizens Financial Group Inc (NYSE:CFG) is the most popular stock in this table. On the other hand Banco de Chile (NYSE:BCH) is the least popular one with only 4 bullish hedge fund positions. Carnival Corporation & Plc (NYSE:CUK) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately CUK wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CUK investors were disappointed as the stock returned 19.7% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
