Is Royal Caribbean Cruises Ltd. (NYSE:RCL) a good stock to buy now? Money managers are in a pessimistic mood. The number of bullish hedge fund bets shrunk by 1 in recent months.
If you’d ask most market participants, hedge funds are seen as worthless, old investment tools of years past. While there are over 8000 funds with their doors open today, we at Insider Monkey choose to focus on the leaders of this group, close to 450 funds. It is estimated that this group controls most of all hedge funds’ total asset base, and by monitoring their top stock picks, we have formulated a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as key, optimistic insider trading sentiment is another way to parse down the financial markets. As the old adage goes: there are plenty of incentives for an executive to drop shares of his or her company, but only one, very clear reason why they would buy. Many empirical studies have demonstrated the useful potential of this tactic if you know where to look (learn more here).
With these “truths” under our belt, it’s important to take a glance at the recent action regarding Royal Caribbean Cruises Ltd. (NYSE:RCL).
How have hedgies been trading Royal Caribbean Cruises Ltd. (NYSE:RCL)?
In preparation for this quarter, a total of 26 of the hedge funds we track held long positions in this stock, a change of -4% from the first quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes meaningfully.
When looking at the hedgies we track, John Thaler’s JAT Capital Management had the largest position in Royal Caribbean Cruises Ltd. (NYSE:RCL), worth close to $81.6 million, comprising 4% of its total 13F portfolio. Coming in second is Ariel Investments, managed by John W. Rogers, which held a $52.5 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Brad Gerstner’s Altimeter Capital Management, Brian Kelly’s Asian Century Quest and Larry Foley and Paul Farrell’s Bronson Point Partners.
Due to the fact that Royal Caribbean Cruises Ltd. (NYSE:RCL) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of funds that decided to sell off their full holdings at the end of the first quarter. At the top of the heap, SAC Subsidiary’s Sigma Capital Management dropped the largest stake of all the hedgies we track, totaling about $10.2 million in stock.. Charles Anderson’s fund, Fox Point Capital Management, also sold off its stock, about $6 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds at the end of the first quarter.
Insider trading activity in Royal Caribbean Cruises Ltd. (NYSE:RCL)
Bullish insider trading is particularly usable when the company in focus has seen transactions within the past half-year. Over the latest half-year time frame, Royal Caribbean Cruises Ltd. (NYSE:RCL) has seen zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Royal Caribbean Cruises Ltd. (NYSE:RCL). These stocks are Vail Resorts, Inc. (NYSE:MTN), Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL), Wynn Resorts, Limited (NASDAQ:WYNN), Penn National Gaming, Inc (NASDAQ:PENN), and MGM Resorts International (NYSE:MGM). All of these stocks are in the resorts & casinos industry and their market caps are closest to RCL’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Vail Resorts, Inc. (NYSE:MTN) | 14 | 0 | 0 |
| Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) | 44 | 0 | 0 |
| Wynn Resorts, Limited (NASDAQ:WYNN) | 36 | 0 | 6 |
| Penn National Gaming, Inc (NASDAQ:PENN) | 31 | 3 | 8 |
| MGM Resorts International (NYSE:MGM) | 37 | 0 | 3 |
With the returns demonstrated by our research, retail investors should always monitor hedge fund and insider trading activity, and Royal Caribbean Cruises Ltd. (NYSE:RCL) is an important part of this process.
