In this article we will check out the progression of hedge fund sentiment towards Playa Hotels & Resorts N.V. (NASDAQ:PLYA) 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.
Playa Hotels & Resorts N.V. (NASDAQ:PLYA) has experienced an increase in support from the world’s most elite money managers lately. Playa Hotels & Resorts N.V. (NASDAQ:PLYA) was in 26 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 23 hedge funds in our database with PLYA positions at the end of the fourth quarter. Our calculations also showed that PLYA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Parag Vora of HG Vora Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. 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. Keeping this in mind we’re going to take a look at the new hedge fund action regarding Playa Hotels & Resorts N.V. (NASDAQ:PLYA).
Do Hedge Funds Think PLYA Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PLYA over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Farallon Capital has the largest position in Playa Hotels & Resorts N.V. (NASDAQ:PLYA), worth close to $109.5 million, corresponding to 0.6% of its total 13F portfolio. Sitting at the No. 2 spot is Rubric Capital Management, led by David Rosen, holding a $48.4 million position; the fund has 2.8% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions contain Parag Vora’s HG Vora Capital Management, Jonathan Kolatch’s Redwood Capital Management and Michael A. Price and Amos Meron’s Empyrean Capital Partners. In terms of the portfolio weights assigned to each position Marlowe Partners allocated the biggest weight to Playa Hotels & Resorts N.V. (NASDAQ:PLYA), around 12.38% of its 13F portfolio. LDR Capital is also relatively very bullish on the stock, designating 6.57 percent of its 13F equity portfolio to PLYA.
Consequently, some big names were breaking ground themselves. Dendur Capital, managed by Malcolm Levine, established the most outsized position in Playa Hotels & Resorts N.V. (NASDAQ:PLYA). Dendur Capital had $18.8 million invested in the company at the end of the quarter. Scott Ross’s Hill Path Capital also made a $15.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Lawrence Raiman’s LDR Capital, James Thomas Berylson’s Berylson Capital Partners, and George McCabe’s Portolan Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Playa Hotels & Resorts N.V. (NASDAQ:PLYA) but similarly valued. We will take a look at National HealthCare Corporation (NYSE:NHC), Ribbon Communications Inc. (NASDAQ:RBBN), Oasis Petroleum Inc. (NASDAQ:OAS), Orion Engineered Carbons SA (NYSE:OEC), Fortuna Silver Mines Inc. (NYSE:FSM), Bolt Biotherapeutics, Inc. (NASDAQ:BOLT), and National Research Corporation (NASDAQ:NRC). This group of stocks’ market valuations resemble PLYA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NHC | 6 | 56897 | -3 |
| RBBN | 15 | 51556 | 5 |
| OAS | 17 | 173658 | 3 |
| OEC | 19 | 186263 | 0 |
| FSM | 12 | 19878 | 1 |
| BOLT | 23 | 423044 | 23 |
| NRC | 9 | 31401 | -3 |
| Average | 14.4 | 134671 | 3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $135 million. That figure was $348 million in PLYA’s case. Bolt Biotherapeutics, Inc. (NASDAQ:BOLT) is the most popular stock in this table. On the other hand National HealthCare Corporation (NYSE:NHC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Playa Hotels & Resorts N.V. (NASDAQ:PLYA) is more popular among hedge funds. Our overall hedge fund sentiment score for PLYA is 88. 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 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Unfortunately PLYA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PLYA were disappointed as the stock returned -1.5% since the end of the first quarter (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Playa Hotels & Resorts N.v. (NASDAQ:PLYA)
Follow Playa Hotels & Resorts N.v. (NASDAQ:PLYA)
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Disclosure: None. This article was originally published at Insider Monkey.
