Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Hilton Grand Vacations Inc. (NYSE:HGV) changed recently.
Hilton Grand Vacations Inc. (NYSE:HGV) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 34 hedge funds’ portfolios at the end of the second quarter of 2021. Our calculations also showed that HGV isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as AdaptHealth Corp. (NASDAQ:AHCO), Applied Industrial Technologies Inc (NYSE:AIT), and Fabrinet (NYSE:FN) to gather more data points.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Harold Levy of Iridian Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s go over the fresh hedge fund action encompassing Hilton Grand Vacations Inc. (NYSE:HGV).
Do Hedge Funds Think HGV Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HGV over the last 24 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, David Zorub’s Parsifal Capital Management has the biggest position in Hilton Grand Vacations Inc. (NYSE:HGV), worth close to $162.6 million, accounting for 13.3% of its total 13F portfolio. Sitting at the No. 2 spot is North Peak Capital, led by Michael Kahan and Jeremy Kahan, holding a $159.3 million position; 30.9% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions include David Cohen and Harold Levy’s Iridian Asset Management, Scott Ross’s Hill Path Capital and Doug Silverman and Alexander Klabin’s Senator Investment Group. In terms of the portfolio weights assigned to each position North Peak Capital allocated the biggest weight to Hilton Grand Vacations Inc. (NYSE:HGV), around 30.89% of its 13F portfolio. Parsifal Capital Management is also relatively very bullish on the stock, designating 13.28 percent of its 13F equity portfolio to HGV.
Seeing as Hilton Grand Vacations Inc. (NYSE:HGV) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there was a specific group of money managers who sold off their positions entirely in the second quarter. At the top of the heap, Stuart J. Zimmer’s Zimmer Partners cut the largest position of all the hedgies followed by Insider Monkey, totaling close to $28.4 million in stock. Marc Lisker, Glenn Fuhrman and John Phelan’s fund, MSDC Management, also sold off its stock, about $3.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Hilton Grand Vacations Inc. (NYSE:HGV). We will take a look at AdaptHealth Corp. (NASDAQ:AHCO), Applied Industrial Technologies Inc (NYSE:AIT), Fabrinet (NYSE:FN), Insight Enterprises, Inc. (NASDAQ:NSIT), Investors Bancorp, Inc. (NASDAQ:ISBC), Ameris Bancorp (NASDAQ:ABCB), and Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS). This group of stocks’ market values are closest to HGV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AHCO | 20 | 366938 | 3 |
| AIT | 18 | 57979 | -3 |
| FN | 14 | 125328 | -1 |
| NSIT | 19 | 368371 | 2 |
| ISBC | 15 | 53960 | 3 |
| ABCB | 15 | 89100 | -1 |
| KTOS | 18 | 285414 | 2 |
| Average | 17 | 192441 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $192 million. That figure was $973 million in HGV’s case. AdaptHealth Corp. (NASDAQ:AHCO) is the most popular stock in this table. On the other hand Fabrinet (NYSE:FN) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Hilton Grand Vacations Inc. (NYSE:HGV) is more popular among hedge funds. Our overall hedge fund sentiment score for HGV is 77.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 21.8% in 2021 through October 11th but still managed to beat the market by 4.4 percentage points. Hedge funds were also right about betting on HGV as the stock returned 15.2% since the end of June (through 10/11) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Hilton Grand Vacations Inc. (NYSE:HGV)
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Disclosure: None. This article was originally published at Insider Monkey.
