We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (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 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Wyndham Destinations, Inc. (NYSE:WYND).
Is Wyndham Destinations, Inc. (NYSE:WYND) undervalued? Money managers are turning bullish. The number of bullish hedge fund positions advanced by 5 lately. Our calculations also showed that WYND 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).
In the financial world there are many methods market participants employ to assess publicly traded companies. Two of the most useful methods are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite fund managers can outclass the broader indices by a superb margin (see the details here).
Paul Marshall of Marshall Wace
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 look at the latest hedge fund action surrounding Wyndham Destinations, Inc. (NYSE:WYND).
Hedge fund activity in Wyndham Destinations, Inc. (NYSE:WYND)
At Q4’s end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards WYND over the last 18 quarters. So, let’s see 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, Iridian Asset Management, managed by David Cohen and Harold Levy, holds the largest position in Wyndham Destinations, Inc. (NYSE:WYND). Iridian Asset Management has a $214.5 million position in the stock, comprising 3.5% of its 13F portfolio. Coming in second is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $61 million position; 0.1% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish comprise Stuart J. Zimmer’s Zimmer Partners, Cliff Asness’s AQR Capital Management and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Iridian Asset Management allocated the biggest weight to Wyndham Destinations, Inc. (NYSE:WYND), around 3.52% of its 13F portfolio. Intrepid Capital Management is also relatively very bullish on the stock, designating 2.95 percent of its 13F equity portfolio to WYND.
As aggregate interest increased, specific money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the biggest position in Wyndham Destinations, Inc. (NYSE:WYND). Marshall Wace LLP had $4.3 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also initiated a $1.1 million position during the quarter. The other funds with new positions in the stock are Schonfeld Strategic Advisors, David Andre and Astro Teller’s Cerebellum Capital, and Philippe Laffont’s Coatue Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Wyndham Destinations, Inc. (NYSE:WYND) but similarly valued. These stocks are Micro Focus Intl PLC (NYSE:MFGP), Assured Guaranty Ltd. (NYSE:AGO), W.R. Grace & Co. (NYSE:GRA), and Littelfuse, Inc. (NASDAQ:LFUS). This group of stocks’ market caps resemble WYND’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MFGP | 11 | 36197 | 3 |
| AGO | 33 | 586688 | -5 |
| GRA | 46 | 1719576 | 3 |
| LFUS | 21 | 300976 | 3 |
| Average | 27.75 | 660859 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $661 million. That figure was $394 million in WYND’s case. W.R. Grace & Co. (NYSE:GRA) is the most popular stock in this table. On the other hand Micro Focus Intl PLC (NYSE:MFGP) is the least popular one with only 11 bullish hedge fund positions. Wyndham Destinations, Inc. (NYSE:WYND) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 but beat the market by 5.5 percentage points. Unfortunately WYND wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WYND were disappointed as the stock returned -57.5% during the same time period 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 many of these stocks already outperformed the market so far this year.
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.
