Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Wyndham Destinations, Inc. (NYSE:WYND)? The smart money sentiment can provide an answer to this question.
Is Wyndham Destinations, Inc. (NYSE:WYND) the right investment to pursue these days? The smart money is becoming hopeful. The number of bullish hedge fund bets went up by 5 recently. Our calculations also showed that wynd isn’t among the 30 most popular stocks among hedge funds. WYND was in 25 hedge funds’ portfolios at the end of March. There were 20 hedge funds in our database with WYND holdings at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a glance at the key hedge fund action regarding Wyndham Destinations, Inc. (NYSE:WYND).
What does the smart money think about Wyndham Destinations, Inc. (NYSE:WYND)?
Heading into the second quarter of 2019, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the fourth quarter of 2018. On the other hand, there were a total of 31 hedge funds with a bullish position in WYND a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, Tremblant Capital held the most valuable stake in Wyndham Destinations, Inc. (NYSE:WYND), which was worth $56.9 million at the end of the first quarter. On the second spot was Millennium Management which amassed $23.4 million worth of shares. Moreover, D E Shaw, Arrowstreet Capital, and Renaissance Technologies were also bullish on Wyndham Destinations, Inc. (NYSE:WYND), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the biggest position in Wyndham Destinations, Inc. (NYSE:WYND). Arrowstreet Capital had $10.5 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $2.6 million position during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, Minhua Zhang’s Weld Capital Management, and Cliff Asness’s AQR Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Wyndham Destinations, Inc. (NYSE:WYND) but similarly valued. These stocks are ACI Worldwide Inc (NASDAQ:ACIW), Air Lease Corp (NYSE:AL), Olin Corporation (NYSE:OLN), and Wintrust Financial Corporation (NASDAQ:WTFC). This group of stocks’ market values are closest to WYND’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ACIW | 23 | 347597 | 2 |
| AL | 23 | 312641 | -10 |
| OLN | 28 | 622842 | -5 |
| WTFC | 23 | 380893 | -1 |
| Average | 24.25 | 415993 | -3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $416 million. That figure was $140 million in WYND’s case. Olin Corporation (NYSE:OLN) is the most popular stock in this table. On the other hand ACI Worldwide Inc (NASDAQ:ACIW) is the least popular one with only 23 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. 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 WYND, though not to the same extent, as the stock returned 1% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
