Is Royal Caribbean Cruises Ltd. (NYSE:RCL) a buy?
In the eyes of many market players, hedge funds are seen as bloated, outdated financial tools of a period lost to current times. Although there are over 8,000 hedge funds trading currently, Insider Monkey looks at the masters of this group, around 525 funds. Analysts calculate that this group oversees the lion’s share of the hedge fund industry’s total assets, and by tracking their best investments, we’ve brought to light a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Equally as crucial, optimistic insider trading activity is another way to look at the world of equities. Obviously, there are a variety of stimuli for a bullish insider to downsize shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the market-beating potential of this strategy if investors understand where to look (learn more here).
Keeping this in mind, we’re going to examine the latest info surrounding Royal Caribbean Cruises Ltd. (NYSE:RCL).
Hedge fund activity in Royal Caribbean Cruises Ltd. (NYSE:RCL)
Heading into Q3, a total of 29 of the hedge funds we track were bullish in this stock, a change of 12% from the first quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly.
According to our 13F database, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Royal Caribbean Cruises Ltd. (NYSE:RCL). Citadel Investment Group has a $73.6 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Tremblant Capital, managed by Brett Barakett, which held a $69.9 million position; 3.3% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include Brad Gerstner’s Altimeter Capital Management, John W. Rogers’s Ariel Investments and Rob Citrone’s Discovery Capital Management.
Consequently, certain bigger names have jumped into Royal Caribbean Cruises Ltd. (NYSE:RCL) headfirst. Citadel Investment Group, managed by Ken Griffin, created the largest position in Royal Caribbean Cruises Ltd. (NYSE:RCL). Citadel Investment Group had 73.6 million invested in the company at the end of the quarter. Brett Barakett’s Tremblant Capital also initiated a $69.9 million position during the quarter. The following funds were also among the new RCL investors: Brad Gerstner’s Altimeter Capital Management, John W. Rogers’s Ariel Investments, and Rob Citrone’s Discovery Capital Management.
Insider trading activity in Royal Caribbean Cruises Ltd. (NYSE:RCL)
Insider buying made by high-level executives is most useful when the primary stock in question has experienced transactions within the past six months. Over the last six-month time frame, Royal Caribbean Cruises Ltd. (NYSE:RCL) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also review the relationship between both of these indicators in other stocks similar to Royal Caribbean Cruises Ltd. (NYSE:RCL). These stocks are Vail Resorts, Inc. (NYSE:MTN), Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL), Wynn Resorts, Limited (NASDAQ:WYNN), Penn National Gaming, Inc (NASDAQ:PENN), and MGM Resorts International (NYSE:MGM). This group of stocks are the members of the resorts & casinos industry and their market caps are similar to RCL’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Vail Resorts, Inc. (NYSE:MTN) | 15 | 0 | 0 |
| Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) | 37 | 0 | 0 |
| Wynn Resorts, Limited (NASDAQ:WYNN) | 37 | 0 | 0 |
| Penn National Gaming, Inc (NASDAQ:PENN) | 36 | 0 | 0 |
| MGM Resorts International (NYSE:MGM) | 37 | 0 | 0 |
Using the returns shown by Insider Monkey’s tactics, regular investors must always pay attention to hedge fund and insider trading activity, and Royal Caribbean Cruises Ltd. (NYSE:RCL) shareholders fit into this picture quite nicely.
