Were Hedge Funds Right About Hilton Grand Vacations Inc. (HGV)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Hilton Grand Vacations Inc. (NYSE:HGV) based on that data and determine whether they were really smart about the stock.

Hilton Grand Vacations Inc. (NYSE:HGV) investors should be aware of a decrease in enthusiasm from smart money lately. Hilton Grand Vacations Inc. (NYSE:HGV) was in 30 hedge funds’ portfolios at the end of September. 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. With all of this in mind let’s check out the key hedge fund action encompassing Hilton Grand Vacations Inc. (NYSE:HGV).

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

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

At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on 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. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

The largest stake in Hilton Grand Vacations Inc. (NYSE:HGV) was held by CAS Investment Partners, which reported holding $285.4 million worth of stock at the end of September. It was followed by Parsifal Capital Management with a $214 million position. Other investors bullish on the company included North Peak Capital, Hill Path Capital, and Iridian Asset Management. 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, earmarking 14.61 percent of its 13F equity portfolio to HGV.

Because Hilton Grand Vacations Inc. (NYSE:HGV) has faced bearish sentiment from hedge fund managers, we can see that there was a specific group of funds who sold off their full holdings last quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the largest investment of the 750 funds tracked by Insider Monkey, totaling an estimated $55 million in stock. Claus Moller’s fund, P2 Capital Partners, also dumped its stock, about $32.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Hilton Grand Vacations Inc. (NYSE:HGV) but similarly valued. We will take a look at 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 valuations match HGV’s market valuation.

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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. 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 still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on HGV as the stock returned 2.7% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.

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