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Did Hedge Funds Make The Right Call On Vail Resorts, Inc. (MTN) ?

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 Vail Resorts, Inc. (NYSE:MTN) based on that data and determine whether they were really smart about the stock.

Vail Resorts, Inc. (NYSE:MTN) shareholders have witnessed an increase in hedge fund sentiment of late. Our calculations also showed that MTN 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.

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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ricky Sandler of Eminence Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to go over the latest hedge fund action encompassing Vail Resorts, Inc. (NYSE:MTN).

What have hedge funds been doing with Vail Resorts, Inc. (NYSE:MTN)?

Heading into the second quarter of 2020, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MTN over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MTN A Good Stock To Buy?

Among these funds, Select Equity Group held the most valuable stake in Vail Resorts, Inc. (NYSE:MTN), which was worth $279.7 million at the end of the third quarter. On the second spot was Diamond Hill Capital which amassed $86.5 million worth of shares. Ariel Investments, MIG Capital, and Candlestick Capital Management 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 Berylson Capital Partners allocated the biggest weight to Vail Resorts, Inc. (NYSE:MTN), around 9.11% of its 13F portfolio. Aravt Global is also relatively very bullish on the stock, earmarking 3.79 percent of its 13F equity portfolio to MTN.

As industrywide interest jumped, some big names have jumped into Vail Resorts, Inc. (NYSE:MTN) headfirst. Ariel Investments, managed by John W. Rogers, assembled the most outsized position in Vail Resorts, Inc. (NYSE:MTN). Ariel Investments had $46.2 million invested in the company at the end of the quarter. Richard Merage’s MIG Capital also initiated a $31 million position during the quarter. The following funds were also among the new MTN investors: Jack Woodruff’s Candlestick Capital Management, Ricky Sandler’s Eminence Capital, and James Woodson Davis’s Woodson Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Vail Resorts, Inc. (NYSE:MTN) but similarly valued. We will take a look at Snap-on Incorporated (NYSE:SNA), Gaming and Leisure Properties Inc (NASDAQ:GLPI), Newell Brands Inc. (NYSE:NWL), and Bright Horizons Family Solutions Inc (NYSE:BFAM). All of these stocks’ market caps are closest to MTN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SNA 26 285106 -1
GLPI 35 475226 6
NWL 24 1004534 -7
BFAM 27 262204 -7
Average 28 506768 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $507 million. That figure was $580 million in MTN’s case. Gaming and Leisure Properties Inc (NASDAQ:GLPI) is the most popular stock in this table. On the other hand Newell Brands Inc. (NYSE:NWL) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Vail Resorts, Inc. (NYSE:MTN) is more popular among hedge funds. 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 managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on MTN, though not to the same extent, as the stock returned 23.3% in Q2 and outperformed the market as well.

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