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Royal Caribbean Cruises Ltd. (NYSE:RCL): Are Hedge Funds Right About This Stock?

Is Royal Caribbean Cruises Ltd. (NYSE:RCL) an excellent stock to buy now? Money managers are becoming more confident. The number of long hedge fund bets improved by 5 lately.

Royal Caribbean Cruises Ltd. (NYSE:RCL)

In the eyes of most market participants, hedge funds are assumed to be worthless, old financial vehicles of the past. While there are greater than 8000 funds in operation at the moment, we hone in on the masters of this group, about 450 funds. It is widely believed that this group has its hands on most of the hedge fund industry’s total asset base, and by keeping an eye on their best picks, we have unearthed a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Just as key, positive insider trading sentiment is another way to parse down the marketplace. As the old adage goes: there are plenty of motivations for a bullish insider to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this strategy if investors know what to do (learn more here).

With these “truths” under our belt, it’s important to take a peek at the latest action encompassing Royal Caribbean Cruises Ltd. (NYSE:RCL).

What does the smart money think about Royal Caribbean Cruises Ltd. (NYSE:RCL)?

At the end of the fourth quarter, a total of 23 of the hedge funds we track held long positions in this stock, a change of 28% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly.

When looking at the hedgies we track, Ariel Investments, managed by John W. Rogers, holds the largest position in Royal Caribbean Cruises Ltd. (NYSE:RCL). Ariel Investments has a $61 million position in the stock, comprising 1.3% of its 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $27 million position; the fund has 0% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Steven Cohen’s SAC Capital Advisors and Manish Chopra’s Tiger Veda.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Sigma Capital Management, managed by SAC Subsidiary, assembled the largest position in Royal Caribbean Cruises Ltd. (NYSE:RCL). Sigma Capital Management had 10 million invested in the company at the end of the quarter. Charles Anderson’s Fox Point Capital Management also initiated a $6 million position during the quarter. The following funds were also among the new RCL investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Neil Chriss’s Hutchin Hill Capital, and Mark A. Nordlicht’s Platinum Management.

How are insiders trading Royal Caribbean Cruises Ltd. (NYSE:RCL)?

Bullish insider trading is most useful when the company we’re looking at has experienced transactions within the past 180 days. Over the last half-year time period, Royal Caribbean Cruises Ltd. (NYSE:RCL) has seen zero unique insiders buying, and 11 insider sales (see the details of insider trades here).

With the returns exhibited by Insider Monkey’s studies, everyday investors should always pay attention to hedge fund and insider trading activity, and Royal Caribbean Cruises Ltd. (NYSE:RCL) applies perfectly to this mantra.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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