Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Hilton Worldwide Holdings Inc (NYSE:HLT).
Hilton Worldwide Holdings Inc (NYSE:HLT) has seen an increase in hedge fund sentiment lately. HLT was in 36 hedge funds’ portfolios at the end of the third quarter of 2016. There were 27 hedge funds in our database with HLT positions at the end of the previous quarter. 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 Weyerhaeuser Company (NYSE:WY), Dollar Tree, Inc. (NASDAQ:DLTR), and St. Jude Medical, Inc. (NYSE:STJ) to gather more data points.
Follow Hilton Worldwide Holdings Inc. (NYSE:HLT)
Follow Hilton Worldwide Holdings Inc. (NYSE:HLT)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, we’re going to view the key action regarding Hilton Worldwide Holdings Inc (NYSE:HLT).
How have hedgies been trading Hilton Worldwide Holdings Inc (NYSE:HLT)?
At Q3’s end, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a jump of 33% from the second quarter of 2016. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Jonathon Jacobson’s Highfields Capital Management has the number one position in Hilton Worldwide Holdings Inc (NYSE:HLT), worth close to $646.9 million, corresponding to 6.1% of its total 13F portfolio. The second largest stake is held by Lone Pine Capital, led by Stephen Mandel, holding a $449.4 million position; the fund has 2% of its 13F portfolio invested in the stock. Other peers with similar optimism encompass Jonathan Auerbach’s Hound Partners, Daniel S. Och’s OZ Management and Richard S. Pzena’s Pzena Investment Management.
Consequently, some big names were leading the bulls’ herd. Stephen Mandel’s Lone Pine Capital initiated the most valuable position in Hilton Worldwide Holdings Inc (NYSE:HLT). The fund had $449.4 million invested in the company at the end of the quarter. Richard S. Pzena’s Pzena Investment Management also made a $224.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Christian Leone’s Luxor Capital Group, Scott McLellan’s Marble Arch Investments, and Aaron Cowen’s Suvretta Capital Management.
Let’s go over hedge fund activity in other stocks similar to Hilton Worldwide Holdings Inc (NYSE:HLT). These stocks are Weyerhaeuser Company (NYSE:WY), Dollar Tree, Inc. (NASDAQ:DLTR), St. Jude Medical, Inc. (NYSE:STJ), and Discover Financial Services (NYSE:DFS). This group of stocks’ market valuations match HLT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WY | 27 | 492871 | -3 |
| DLTR | 63 | 3990852 | -1 |
| STJ | 54 | 3180378 | 0 |
| DFS | 38 | 671018 | 2 |
As you can see these stocks had an average of 46 hedge funds with bullish positions and the average amount invested in these stocks was $2.08 billion. That figure was approximately $3.11 billion in HLT’s case. Dollar Tree, Inc. (NASDAQ:DLTR) is the most popular stock in this table. On the other hand Weyerhaeuser Company (NYSE:WY) is the least popular one with only 27 bullish hedge fund positions. Hilton Worldwide Holdings Inc (NYSE:HLT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard DLTR might be a better candidate to consider a long position.
Disclosure: none.
