Do Hedge Funds Love Marriott Vacations Worldwide Corporation (VAC)?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Marriott Vacations Worldwide Corporation (NYSE:VAC) to find out whether there were any major changes in hedge funds’ views.

Marriott Vacations Worldwide Corporation (NYSE:VAC) investors should be aware of an increase in hedge fund interest in recent months. Marriott Vacations Worldwide Corporation (NYSE:VAC) was in 24 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 32. Our calculations also showed that VAC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Gabriel Plotkin Melvin Capital Management

Gabriel Plotkin of Melvin Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a peek at the latest hedge fund action encompassing Marriott Vacations Worldwide Corporation (NYSE:VAC).

Do Hedge Funds Think VAC Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from one quarter earlier. On the other hand, there were a total of 25 hedge funds with a bullish position in VAC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Richard Mashaal’s Rima Senvest Management has the number one position in Marriott Vacations Worldwide Corporation (NYSE:VAC), worth close to $155.9 million, accounting for 4.9% of its total 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $150.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions contain Brett Barakett’s Tremblant Capital, Gabriel Plotkin’s Melvin Capital Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Yarra Square Partners allocated the biggest weight to Marriott Vacations Worldwide Corporation (NYSE:VAC), around 7.16% of its 13F portfolio. Rima Senvest Management is also relatively very bullish on the stock, earmarking 4.91 percent of its 13F equity portfolio to VAC.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Melvin Capital Management, managed by Gabriel Plotkin, created the biggest position in Marriott Vacations Worldwide Corporation (NYSE:VAC). Melvin Capital Management had $87.1 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $17.8 million investment in the stock during the quarter. The other funds with brand new VAC positions are Anthony Joseph Vaccarino’s North Fourth Asset Management, Matthew Hulsizer’s PEAK6 Capital Management, and Joshua Pearl’s Hickory Lane Capital Management.

Let’s now review hedge fund activity in other stocks similar to Marriott Vacations Worldwide Corporation (NYSE:VAC). These stocks are II-VI, Inc. (NASDAQ:IIVI), Sealed Air Corporation (NYSE:SEE), TCF Financial Corporation (NYSE:TCF), Starwood Property Trust, Inc. (NYSE:STWD), Royal Gold, Inc (NASDAQ:RGLD), Sotera Health Company (NASDAQ:SHC), and Exelixis, Inc. (NASDAQ:EXEL). This group of stocks’ market caps resemble VAC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IIVI 39 267417 13
SEE 27 765215 -5
TCF 13 398544 -1
STWD 10 176663 -3
RGLD 17 237026 -9
SHC 36 609684 9
EXEL 27 992164 3
Average 24.1 492388 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $492 million. That figure was $604 million in VAC’s case. II-VI, Inc. (NASDAQ:IIVI) is the most popular stock in this table. On the other hand Starwood Property Trust, Inc. (NYSE:STWD) is the least popular one with only 10 bullish hedge fund positions. Marriott Vacations Worldwide Corporation (NYSE:VAC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VAC is 54.6. 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 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 gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately VAC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); VAC investors were disappointed as the stock returned -14.5% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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