Is Hilton Grand Vacations Inc. (HGV) A Good Stock To Buy?

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 the smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Hilton Grand Vacations Inc. (NYSE:HGV)? The smart money sentiment can provide an answer to this question.

Is HGV a good stock to buy? Hilton Grand Vacations Inc. (NYSE:HGV) shareholders have witnessed a decrease in hedge fund interest recently. Hilton Grand Vacations Inc. (NYSE:HGV) was in 30 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 46. Our calculations also showed that HGV isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now we’re going to take a look at the fresh hedge fund action regarding Hilton Grand Vacations Inc. (NYSE:HGV).

Bruce Kovner of Caxton Associates LP

Do Hedge Funds Think HGV Is A Good Stock To Buy Now?

At third quarter’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards HGV over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, CAS Investment Partners was the largest shareholder of Hilton Grand Vacations Inc. (NYSE:HGV), with a stake worth $285.4 million reported as of the end of September. Trailing CAS Investment Partners was Parsifal Capital Management, which amassed a stake valued at $214 million. North Peak Capital, Hill Path Capital, and Iridian Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. 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 24.67% of its 13F portfolio. Parsifal Capital Management is also relatively very bullish on the stock, designating 14.61 percent of its 13F equity portfolio to HGV.

Because Hilton Grand Vacations Inc. (NYSE:HGV) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there is a sect of money managers who were dropping their entire stakes heading into Q4. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the biggest position of the “upper crust” of funds tracked by Insider Monkey, comprising about $55 million in stock. Claus Moller’s fund, P2 Capital Partners, also sold off its stock, about $32.3 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 4 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to Hilton Grand Vacations Inc. (NYSE:HGV). These stocks are LG Display Co Ltd. (NYSE:LPL), Vir Biotechnology, Inc. (NASDAQ:VIR), Vontier Corporation (NYSE:VNT), The AZEK Company Inc. (NYSE:AZEK), Watts Water Technologies Inc (NYSE:WTS), Range Resources Corp. (NYSE:RRC), and Clean Harbors Inc (NYSE:CLH). This group of stocks’ market caps are similar to HGV’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $390 million. That figure was $1202 million in HGV’s case. The AZEK Company Inc. (NYSE:AZEK) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 9 bullish hedge fund positions. Hilton Grand Vacations Inc. (NYSE:HGV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HGV is 56.8. 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. 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 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 gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately HGV wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HGV were disappointed as the stock returned -0.1% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.