While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Travel + Leisure Co. (NYSE:TNL).
Travel + Leisure Co. (NYSE:TNL) has experienced an increase in activity from the world’s largest hedge funds in recent months. Travel + Leisure Co. (NYSE:TNL) was in 30 hedge funds’ portfolios at the end of the first 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 Q1 rankings).
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Do Hedge Funds Think TNL Is A Good Stock To Buy Now?
At Q1’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the fourth quarter of 2020. On the other hand, there were a total of 25 hedge funds with a bullish position in TNL a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, David Cohen and Harold Levy’s Iridian Asset Management has the number one position in Travel + Leisure Co. (NYSE:TNL), worth close to $204.7 million, comprising 3.5% of its total 13F portfolio. The second most bullish fund manager is Rima Senvest Management, managed by Richard Mashaal, which holds a $123.9 million position; the fund has 3.9% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish contain Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Solel Partners allocated the biggest weight to Travel + Leisure Co. (NYSE:TNL), around 9.94% of its 13F portfolio. Strycker View Capital is also relatively very bullish on the stock, designating 4.96 percent of its 13F equity portfolio to TNL.
Consequently, some big names were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, established the biggest position in Travel + Leisure Co. (NYSE:TNL). Point72 Asset Management had $30.5 million invested in the company at the end of the quarter. Eduardo Abush’s Waterfront Capital Partners also made a $11.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Frank Fu’s CaaS Capital, Sander Gerber’s Hudson Bay Capital Management, and Michael Hintze’s CQS Cayman LP.
Let’s now take a look at 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 Shell Midstream Partners LP (NYSE:SHLX), Daqo New Energy Corp (NYSE:DQ), The Howard Hughes Corporation (NYSE:HHC), Herbalife Nutrition Ltd. (NYSE:HLF), Bank OZK (NASDAQ:OZK), Kemper Corporation (NYSE:KMPR), and Oscar Health, Inc. (NYSE:OSCR). All of these stocks’ market caps are similar to TNL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SHLX | 4 | 27451 | -3 |
| DQ | 17 | 129832 | -1 |
| HHC | 27 | 1619423 | 0 |
| HLF | 40 | 1994608 | -1 |
| OZK | 25 | 237162 | 5 |
| KMPR | 11 | 43239 | -2 |
| OSCR | 26 | 1337245 | 26 |
| Average | 21.4 | 769851 | 3.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.4 hedge funds with bullish positions and the average amount invested in these stocks was $770 million. That figure was $746 million in TNL’s case. Herbalife Nutrition Ltd. (NYSE:HLF) is the most popular stock in this table. On the other hand Shell Midstream Partners LP (NYSE:SHLX) is the least popular one with only 4 bullish hedge fund positions. Travel + Leisure Co. (NYSE:TNL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TNL is 68.6. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately TNL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TNL were disappointed as the stock returned -1.1% since the end of March (through 7/2) 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 many of these stocks already outperformed the market since 2019.
Follow Travel & Leisure Co. (NYSE:TNL)
Follow Travel & Leisure Co. (NYSE:TNL)
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Disclosure: None. This article was originally published at Insider Monkey.