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Carnival Corporation & Plc (CCL): Hedge Fund Sentiment Unchanged

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 second 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 5 years and analyze what the smart money thinks of Carnival Corporation & Plc (NYSE:CCL) based on that data and determine whether they were really smart about the stock.

Hedge fund interest in Carnival Corporation & Plc (NYSE:CCL) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CCL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). 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 Zillow Group Inc (NASDAQ:Z), Markel Corporation (NYSE:MKL), and SK Telecom Co., Ltd. (NYSE:SKM) to gather more data points. Our calculations also showed that CCL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Daniel Gold QVT Financial

Daniel Gold of QVT Financial

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s review the new hedge fund action regarding Carnival Corporation & Plc (NYSE:CCL).

Hedge fund activity in Carnival Corporation & Plc (NYSE:CCL)

At the end of June, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in CCL over the last 20 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, AQR Capital Management held the most valuable stake in Carnival Corporation & Plc (NYSE:CCL), which was worth $85.9 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $70.1 million worth of shares. D E Shaw, Duquesne Capital, and Two Sigma Advisors 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 Axel Capital Management allocated the biggest weight to Carnival Corporation & Plc (NYSE:CCL), around 3.34% of its 13F portfolio. Duquesne Capital is also relatively very bullish on the stock, designating 1.41 percent of its 13F equity portfolio to CCL.

Since Carnival Corporation & Plc (NYSE:CCL) has faced declining sentiment from hedge fund managers, logic holds that there is a sect of fund managers that decided to sell off their positions entirely in the second quarter. It’s worth mentioning that Glen Kacher’s Light Street Capital said goodbye to the largest stake of the 750 funds monitored by Insider Monkey, totaling an estimated $25.3 million in stock. Hyder Ahmad’s fund, Broad Peak Investment Holdings, also said goodbye to its stock, about $11.5 million worth. These bearish behaviors are interesting, 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 Carnival Corporation & Plc (NYSE:CCL) but similarly valued. These stocks are Zillow Group Inc (NASDAQ:Z), Markel Corporation (NYSE:MKL), SK Telecom Co., Ltd. (NYSE:SKM), Insulet Corporation (NASDAQ:PODD), J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), Expeditors International of Washington, Inc. (NASDAQ:EXPD), and Qorvo Inc (NASDAQ:QRVO). This group of stocks’ market valuations resemble CCL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
Z 59 2299780 22
MKL 33 943795 1
SKM 8 129598 3
PODD 44 985462 8
JBHT 24 215950 -1
EXPD 33 443457 2
QRVO 51 1608774 12
Average 36 946688 6.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $947 million. That figure was $362 million in CCL’s case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 8 bullish hedge fund positions. Carnival Corporation & Plc (NYSE:CCL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CCL is 45.1. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23.8% in 2020 through September 14th and surpassed the market by 17.6 percentage points. Unfortunately CCL wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); CCL investors were disappointed as the stock returned 8.7% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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