In this article we will check out the progression of hedge fund sentiment towards Carnival Corporation & Plc (NYSE:CCL) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is CCL a good stock to buy? The best stock pickers were turning bullish. The number of bullish hedge fund bets improved by 6 in recent months. Carnival Corporation & Plc (NYSE:CCL) was in 37 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 53. Our calculations also showed that CCL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 31 hedge funds in our database with CCL holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Stanley Druckenmiller of Duquesne Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Now let’s view the key hedge fund action surrounding Carnival Corporation & Plc (NYSE:CCL).
Do Hedge Funds Think CCL Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the second quarter of 2020. By comparison, 30 hedge funds held shares or bullish call options in CCL a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Griffin’s Citadel Investment Group has the largest call position in Carnival Corporation & Plc (NYSE:CCL), worth close to $68.4 million, amounting to less than 0.1%% of its total 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $42.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that are bullish contain Paul Marshall and Ian Wace’s Marshall Wace LLP, and Stanley Druckenmiller’s Duquesne Capital. In terms of the portfolio weights assigned to each position White Square Capital allocated the biggest weight to Carnival Corporation & Plc (NYSE:CCL), around 2.43% of its 13F portfolio. Axel Capital Management is also relatively very bullish on the stock, earmarking 2.14 percent of its 13F equity portfolio to CCL.
As industrywide interest jumped, specific money managers have jumped into Carnival Corporation & Plc (NYSE:CCL) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Carnival Corporation (NYSE:CCL). Marshall Wace LLP had $41.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $18.3 million investment in the stock during the quarter. The other funds with brand new CCL positions are Simon Sadler’s Segantii Capital, Parag Vora’s HG Vora Capital Management, and Doug Silverman and Alexander Klabin’s Senator Investment Group.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Carnival Corporation & Plc (NYSE:CCL) but similarly valued. These stocks are POSCO (NYSE:PKX), J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), HubSpot Inc (NYSE:HUBS), Mid America Apartment Communities Inc (NYSE:MAA), The Hartford Financial Services Group Inc (NYSE:HIG), Teradyne, Inc. (NYSE:TER), and Elanco Animal Health Incorporated (NYSE:ELAN). This group of stocks’ market caps resemble CCL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PKX | 11 | 87343 | 1 |
| JBHT | 38 | 329247 | 14 |
| HUBS | 40 | 1187421 | -1 |
| MAA | 27 | 449666 | -3 |
| HIG | 36 | 966601 | -3 |
| TER | 42 | 1365348 | 8 |
| ELAN | 21 | 302734 | -9 |
| Average | 30.7 | 669766 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.7 hedge funds with bullish positions and the average amount invested in these stocks was $670 million. That figure was $285 million in CCL’s case. Teradyne, Inc. (NYSE:TER) is the most popular stock in this table. On the other hand POSCO (NYSE:PKX) is the least popular one with only 11 bullish hedge fund positions. Carnival Corporation & Plc (NYSE:CCL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CCL is 72.9. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on CCL as the stock returned 41.4% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
