Were Hedge Funds Illusioned With Vail Resorts, Inc. (MTN)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Vail Resorts, Inc. (NYSE:MTN) and determine whether hedge funds skillfully traded this stock.

Vail Resorts, Inc. (NYSE:MTN) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 40 hedge funds’ portfolios at the end of September. Our calculations also showed that MTN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare MTN to other stocks including Suzano S.A. (NYSE:SUZ), GameStop Corp. (NYSE:GME), and Howmet Aerospace Inc. (NYSE:HWM) to get a better sense of its popularity.

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 let’s take a look at the key hedge fund action regarding Vail Resorts, Inc. (NYSE:MTN).

John Rogers of Ariel Investments

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

At the end of September, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2021. By comparison, 30 hedge funds held shares or bullish call options in MTN a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Ariel Investments held the most valuable stake in Vail Resorts, Inc. (NYSE:MTN), which was worth $87.5 million at the end of the third quarter. On the second spot was Select Equity Group which amassed $85.8 million worth of shares. Candlestick Capital Management, Citadel Investment Group, and MSDC 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 Aravt Global allocated the biggest weight to Vail Resorts, Inc. (NYSE:MTN), around 7.73% of its 13F portfolio. MSDC Management is also relatively very bullish on the stock, designating 2.76 percent of its 13F equity portfolio to MTN.

Due to the fact that Vail Resorts, Inc. (NYSE:MTN) has faced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there were a few fund managers that slashed their positions entirely last quarter. Intriguingly, Matthew Stadelman’s Diamond Hill Capital cut the biggest position of the 750 funds followed by Insider Monkey, worth an estimated $97.9 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund cut about $31.1 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 now review hedge fund activity in other stocks – not necessarily in the same industry as Vail Resorts, Inc. (NYSE:MTN) but similarly valued. We will take a look at Suzano S.A. (NYSE:SUZ), GameStop Corp. (NYSE:GME), Howmet Aerospace Inc. (NYSE:HWM), Futu Holdings Limited (NASDAQ:FUTU), Citrix Systems, Inc. (NASDAQ:CTXS), WestRock Company (NYSE:WRK), and Farfetch Limited (NYSE:FTCH). All of these stocks’ market caps match MTN’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $1290 million. That figure was $645 million in MTN’s case. Farfetch Limited (NYSE:FTCH) is the most popular stock in this table. On the other hand Suzano S.A. (NYSE:SUZ) is the least popular one with only 6 bullish hedge fund positions. Vail Resorts, Inc. (NYSE:MTN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MTN is 72.8. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, MTN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MTN were disappointed as the stock returned -16.6% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.

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