We at Insider Monkey have gone over 738 13F filings that hedge funds and famous value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of Playa Hotels & Resorts N.V. (NASDAQ:PLYA).
Is Playa Hotels & Resorts N.V. (NASDAQ:PLYA) an attractive investment today? The smart money is selling. The number of long hedge fund positions dropped by 1 lately. Our calculations also showed that plya isn’t among the 30 most popular stocks among hedge funds.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to take a gander at the fresh hedge fund action regarding Playa Hotels & Resorts N.V. (NASDAQ:PLYA).
What does the smart money think about Playa Hotels & Resorts N.V. (NASDAQ:PLYA)?
At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the fourth quarter of 2018. By comparison, 18 hedge funds held shares or bullish call options in PLYA a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
More specifically, Farallon Capital was the largest shareholder of Playa Hotels & Resorts N.V. (NASDAQ:PLYA), with a stake worth $233.5 million reported as of the end of March. Trailing Farallon Capital was Empyrean Capital Partners, which amassed a stake valued at $37.4 million. Armistice Capital, Governors Lane, and Marlowe Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Playa Hotels & Resorts N.V. (NASDAQ:PLYA) has experienced bearish sentiment from the smart money, it’s safe to say that there were a few hedgies who sold off their full holdings last quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management sold off the biggest stake of all the hedgies followed by Insider Monkey, valued at close to $2.6 million in stock, and Marc Majzner’s Clearline Capital was right behind this move, as the fund dumped about $0.7 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Playa Hotels & Resorts N.V. (NASDAQ:PLYA). We will take a look at Clementia Pharmaceuticals Inc. (NASDAQ:CMTA), Winnebago Industries, Inc. (NYSE:WGO), Tactile Systems Technology, Inc. (NASDAQ:TCMD), and Intersect ENT Inc (NASDAQ:XENT). This group of stocks’ market values are similar to PLYA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CMTA | 15 | 456920 | 3 |
| WGO | 15 | 121377 | 0 |
| TCMD | 17 | 80188 | 3 |
| XENT | 23 | 263913 | 3 |
| Average | 17.5 | 230600 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $416 million in PLYA’s case. Intersect ENT Inc (NASDAQ:XENT) is the most popular stock in this table. On the other hand Clementia Pharmaceuticals Inc. (NASDAQ:CMTA) is the least popular one with only 15 bullish hedge fund positions. Playa Hotels & Resorts N.V. (NASDAQ:PLYA) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on PLYA as the stock returned 6.6% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
