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 in recent 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 certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Park Hotels & Resorts Inc. (NYSE:PK).
Is Park Hotels & Resorts Inc. (NYSE:PK) a bargain? The smart money was getting more bullish. The number of bullish hedge fund bets increased by 1 recently. Park Hotels & Resorts Inc. (NYSE:PK) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistic is 34. Our calculations also showed that PK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 18 hedge funds in our database with PK holdings at the end of March.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ken Heebner of Capital Growth Management
Now we’re going to take a look at the new hedge fund action regarding Park Hotels & Resorts Inc. (NYSE:PK).
Do Hedge Funds Think PK Is A Good Stock To Buy Now?
At Q2’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PK over the last 24 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Capital Growth Management was the largest shareholder of Park Hotels & Resorts Inc. (NYSE:PK), with a stake worth $23.9 million reported as of the end of June. Trailing Capital Growth Management was Chescapmanager LLC, which amassed a stake valued at $20.6 million. Kettle Hill Capital Management, Two Sigma Advisors, and Balyasny 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 Masterton Capital Management allocated the biggest weight to Park Hotels & Resorts Inc. (NYSE:PK), around 7.12% of its 13F portfolio. LDR Capital is also relatively very bullish on the stock, earmarking 5.11 percent of its 13F equity portfolio to PK.
Consequently, some big names have jumped into Park Hotels & Resorts Inc. (NYSE:PK) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in Park Hotels & Resorts Inc. (NYSE:PK). Balyasny Asset Management had $13.8 million invested in the company at the end of the quarter. Stephen Mykijewycz’s Masterton Capital Management also initiated a $11 million position during the quarter. The following funds were also among the new PK investors: Lawrence Raiman’s LDR Capital, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Daniel Johnson’s Gillson Capital.
Let’s also examine hedge fund activity in other stocks similar to Park Hotels & Resorts Inc. (NYSE:PK). These stocks are AppFolio Inc (NASDAQ:APPF), Selective Insurance Group (NASDAQ:SIGI), The Hanover Insurance Group, Inc. (NYSE:THG), Agora, Inc. (NASDAQ:API), Curtiss-Wright Corp. (NYSE:CW), Agree Realty Corporation (NYSE:ADC), and Amyris Inc (NASDAQ:AMRS). This group of stocks’ market caps resemble PK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APPF | 17 | 406389 | 5 |
| SIGI | 14 | 36664 | 1 |
| THG | 16 | 91408 | -2 |
| API | 17 | 564058 | 0 |
| CW | 19 | 206222 | -3 |
| ADC | 18 | 187182 | 0 |
| AMRS | 21 | 567085 | 7 |
| Average | 17.4 | 294144 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $294 million. That figure was $121 million in PK’s case. Amyris Inc (NASDAQ:AMRS) is the most popular stock in this table. On the other hand Selective Insurance Group (NASDAQ:SIGI) is the least popular one with only 14 bullish hedge fund positions. Park Hotels & Resorts Inc. (NYSE:PK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PK is 58.5. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately PK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PK were disappointed as the stock returned -9.8% since the end of June (through 10/22) 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.
Follow Park Hotels & Resorts Inc. (NYSE:PK)
Follow Park Hotels & Resorts Inc. (NYSE:PK)
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Disclosure: None. This article was originally published at Insider Monkey.
