Did Hedge Funds Make The Right Call On Park Hotels & Resorts Inc. (PK) ?

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 first 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 4.5 years and analyze what the smart money thinks of Park Hotels & Resorts Inc. (NYSE:PK) based on that data and determine whether they were really smart about the stock.

Park Hotels & Resorts Inc. (NYSE:PK) has experienced an increase in hedge fund interest lately. PK was in 26 hedge funds’ portfolios at the end of the first quarter of 2020. There were 13 hedge funds in our database with PK positions at the end of the previous quarter. Our calculations also showed that PK isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Mason Hawkins of Southeastern Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Keeping this in mind we’re going to take a look at the new hedge fund action encompassing Park Hotels & Resorts Inc. (NYSE:PK).

How are hedge funds trading Park Hotels & Resorts Inc. (NYSE:PK)?

Heading into the second quarter of 2020, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PK over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Park Hotels & Resorts Inc. (NYSE:PK) was held by Southeastern Asset Management, which reported holding $90.2 million worth of stock at the end of September. It was followed by King Street Capital with a $19.8 million position. Other investors bullish on the company included Balyasny Asset Management, Arrowstreet Capital, and Renaissance Technologies. In terms of the portfolio weights assigned to each position 1060 Capital Management allocated the biggest weight to Park Hotels & Resorts Inc. (NYSE:PK), around 2.78% of its 13F portfolio. King Street Capital is also relatively very bullish on the stock, earmarking 2.21 percent of its 13F equity portfolio to PK.

Now, key hedge funds have been driving this bullishness. King Street Capital, managed by Brian J. Higgins, established the biggest position in Park Hotels & Resorts Inc. (NYSE:PK). King Street Capital had $19.8 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $13.1 million position during the quarter. The other funds with brand new PK positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Bill Ackman’s Pershing Square, and Ken Griffin’s Citadel Investment Group.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Park Hotels & Resorts Inc. (NYSE:PK) but similarly valued. These stocks are IBERIABANK Corporation (NASDAQ:IBKC), Frontline Ltd (NYSE:FRO), Alarm.com Holdings Inc (NASDAQ:ALRM), and Alector, Inc. (NASDAQ:ALEC). All of these stocks’ market caps match PK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IBKC 30 129219 -2
FRO 24 116530 7
ALRM 23 153195 -5
ALEC 15 416696 2
Average 23 203910 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $204 million. That figure was $163 million in PK’s case. IBERIABANK Corporation (NASDAQ:IBKC) is the most popular stock in this table. On the other hand Alector, Inc. (NASDAQ:ALEC) is the least popular one with only 15 bullish hedge fund positions. Park Hotels & Resorts Inc. (NYSE:PK) is not the most popular stock in this group but hedge fund interest is still above average. 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on PK, though not to the same extent, as the stock returned 25% during the second quarter and outperformed the market as well.

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