Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Hilton Grand Vacations Inc. (NYSE:HGV).
Hilton Grand Vacations Inc. (NYSE:HGV) was in 46 hedge funds’ portfolios at the end of December. HGV has experienced an increase in hedge fund sentiment lately. There were 43 hedge funds in our database with HGV positions at the end of the previous quarter. Our calculations also showed that HGV isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Wall Street Bull
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a gander at the fresh hedge fund action surrounding Hilton Grand Vacations Inc. (NYSE:HGV).
What have hedge funds been doing with Hilton Grand Vacations Inc. (NYSE:HGV)?
At Q4’s end, a total of 46 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in HGV a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Hilton Grand Vacations Inc. (NYSE:HGV) was held by Zimmer Partners, which reported holding $214.6 million worth of stock at the end of September. It was followed by P2 Capital Partners with a $154.8 million position. Other investors bullish on the company included Centerbridge Partners, Long Pond Capital, and Rima Senvest Management. In terms of the portfolio weights assigned to each position Centerbridge Partners allocated the biggest weight to Hilton Grand Vacations Inc. (NYSE:HGV), around 22.83% of its 13F portfolio. P2 Capital Partners is also relatively very bullish on the stock, dishing out 11.35 percent of its 13F equity portfolio to HGV.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Melqart Asset Management, managed by Michel Massoud, established the most outsized position in Hilton Grand Vacations Inc. (NYSE:HGV). Melqart Asset Management had $32.8 million invested in the company at the end of the quarter. Renaissance Technologies also made a $8.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Asad Rahman and Aman Kapadia’s Akaris Global Partners, Avi Fruchter’s Anavon Capital, and Mark Coe’s Intrinsic Edge Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Hilton Grand Vacations Inc. (NYSE:HGV) but similarly valued. We will take a look at Cannae Holdings, Inc. (NYSE:CNNE), Element Solutions Inc (NYSE:ESI), Columbia Banking System Inc (NASDAQ:COLB), and South State Corporation (NASDAQ:SSB). This group of stocks’ market values match HGV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNNE | 31 | 376691 | 12 |
| ESI | 37 | 736292 | 9 |
| COLB | 10 | 108526 | 1 |
| SSB | 15 | 63154 | -3 |
| Average | 23.25 | 321166 | 4.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $321 million. That figure was $1039 million in HGV’s case. Element Solutions Inc (NYSE:ESI) is the most popular stock in this table. On the other hand Columbia Banking System Inc (NASDAQ:COLB) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Hilton Grand Vacations Inc. (NYSE:HGV) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th and still beat the market by 5.5 percentage points. Unfortunately HGV wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on HGV were disappointed as the stock returned -51.9% during the first two and a half months of 2020 (through March 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
