Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards SeaWorld Entertainment Inc (NYSE:SEAS) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is SeaWorld Entertainment Inc (NYSE:SEAS) a buy, sell, or hold? Money managers were getting less optimistic. The number of bullish hedge fund positions went down by 3 in recent months. SeaWorld Entertainment Inc (NYSE:SEAS) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 41. Our calculations also showed that SEAS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 41 hedge funds in our database with SEAS holdings at the end of June.
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 we’re going to review the recent hedge fund action regarding SeaWorld Entertainment Inc (NYSE:SEAS).
Peter Algert of Algert Global
Do Hedge Funds Think SEAS Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the second quarter of 2021. By comparison, 32 hedge funds held shares or bullish call options in SEAS a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Scott Ross’s Hill Path Capital has the largest position in SeaWorld Entertainment Inc (NYSE:SEAS), worth close to $1.505 billion, corresponding to 78% of its total 13F portfolio. Sitting at the No. 2 spot is Melvin Capital Management, led by Gabriel Plotkin, holding a $190 million position; 1% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish include Gabriel Plotkin’s Melvin Capital Management, Jeffrey Jacobowitz’s Simcoe Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Hill Path Capital allocated the biggest weight to SeaWorld Entertainment Inc (NYSE:SEAS), around 78.02% of its 13F portfolio. Simcoe Capital Management is also relatively very bullish on the stock, earmarking 8 percent of its 13F equity portfolio to SEAS.
Judging by the fact that SeaWorld Entertainment Inc (NYSE:SEAS) has witnessed falling interest from hedge fund managers, we can see that there was a specific group of hedgies that decided to sell off their entire stakes in the third quarter. It’s worth mentioning that Gregg Moskowitz’s Interval Partners cut the biggest investment of the 750 funds watched by Insider Monkey, valued at an estimated $16.6 million in call options. Brad Stephens’s fund, Six Columns Capital, also dumped its call options, about $10 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 3 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to SeaWorld Entertainment Inc (NYSE:SEAS). These stocks are Envestnet Inc (NYSE:ENV), Option Care Health, Inc. (NASDAQ:OPCH), Tegna Inc (NYSE:TGNA), Coursera, Inc. (NYSE:COUR), American Eagle Outfitters Inc. (NYSE:AEO), Ortho Clinical Diagnostics Holdings plc (NASDAQ:OCDX), and Fisker Inc. (NYSE:FSR). All of these stocks’ market caps match SEAS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENV | 12 | 357107 | -5 |
| OPCH | 30 | 361789 | -1 |
| TGNA | 37 | 420370 | 19 |
| COUR | 25 | 173727 | 14 |
| AEO | 24 | 1208509 | -17 |
| OCDX | 30 | 272834 | 9 |
| FSR | 15 | 228103 | -1 |
| Average | 24.7 | 431777 | 2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $432 million. That figure was $2209 million in SEAS’s case. Tegna Inc (NYSE:TGNA) is the most popular stock in this table. On the other hand Envestnet Inc (NYSE:ENV) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks SeaWorld Entertainment Inc (NYSE:SEAS) is more popular among hedge funds. Our overall hedge fund sentiment score for SEAS is 79.8. 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 returned 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on SEAS as the stock returned 7.7% since the end of September (through 1/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
