A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on Royal Caribbean Cruises Ltd. (NYSE:RCL).
Royal Caribbean Cruises Ltd. (NYSE:RCL) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 42 hedge funds’ portfolios at the end of June. Our calculations also showed that RCL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). 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 Dover Corporation (NYSE:DOV), Caesars Entertainment Inc. (NASDAQ:CZR), and Xylem Inc (NYSE:XYL) to gather more data points.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Stuart Zimmer of Zimmer Partners
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 are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. Keeping this in mind let’s take a glance at the recent hedge fund action surrounding Royal Caribbean Cruises Ltd. (NYSE:RCL).
Do Hedge Funds Think RCL Is A Good Stock To Buy Now?
At the end of June, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 31 hedge funds held shares or bullish call options in RCL a year ago. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of Royal Caribbean Cruises Ltd. (NYSE:RCL), with a stake worth $176.3 million reported as of the end of June. Trailing Citadel Investment Group was Citadel Investment Group, which amassed a stake valued at $107.4 million. Columbus Hill Capital Management, Zimmer Partners, and Candlestick Capital 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 Columbus Hill Capital Management allocated the biggest weight to Royal Caribbean Cruises Ltd. (NYSE:RCL), around 6.45% of its 13F portfolio. Proem Advisors is also relatively very bullish on the stock, designating 4.69 percent of its 13F equity portfolio to RCL.
Seeing as Royal Caribbean Cruises Ltd. (NYSE:RCL) has experienced falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers that elected to cut their full holdings by the end of the second quarter. It’s worth mentioning that Matthew L Pinz’s Pinz Capital dumped the largest stake of all the hedgies monitored by Insider Monkey, worth an estimated $4.8 million in stock. Greg Eisner’s fund, Engineers Gate Manager, also said goodbye to its stock, about $3.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Royal Caribbean Cruises Ltd. (NYSE:RCL). These stocks are Dover Corporation (NYSE:DOV), Caesars Entertainment Inc. (NASDAQ:CZR), Xylem Inc (NYSE:XYL), Fox Corporation (NASDAQ:FOXA), PPL Corporation (NYSE:PPL), 10x Genomics, Inc. (NASDAQ:TXG), and Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK). This group of stocks’ market values are similar to RCL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DOV | 29 | 700034 | 3 |
| CZR | 73 | 1839888 | -3 |
| XYL | 23 | 931677 | 0 |
| FOXA | 35 | 441270 | -3 |
| PPL | 23 | 417630 | -2 |
| TXG | 28 | 1447446 | 5 |
| TLK | 5 | 108737 | 1 |
| Average | 30.9 | 840955 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.9 hedge funds with bullish positions and the average amount invested in these stocks was $841 million. That figure was $597 million in RCL’s case. Caesars Entertainment Inc. (NASDAQ:CZR) is the most popular stock in this table. On the other hand Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE:TLK) is the least popular one with only 5 bullish hedge fund positions. Royal Caribbean Cruises Ltd. (NYSE:RCL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RCL is 56.4. 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 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 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. Hedge funds were also right about betting on RCL as the stock returned 13.4% since the end of Q2 (through 11/5) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Royal Caribbean Cruises Ltd (NYSE:RCL)
Follow Royal Caribbean Cruises Ltd (NYSE:RCL)
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Disclosure: None. This article was originally published at Insider Monkey.
