In this article we will check out the progression of hedge fund sentiment towards Vail Resorts, Inc. (NYSE:MTN) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Vail Resorts, Inc. (NYSE:MTN) has experienced an increase in activity from the world’s largest hedge funds recently. 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 51 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.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a look at the new hedge fund action surrounding Vail Resorts, Inc. (NYSE:MTN).
What have hedge funds been doing with Vail Resorts, Inc. (NYSE:MTN)?
At Q1’s end, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MTN over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Select Equity Group was the largest shareholder of Vail Resorts, Inc. (NYSE:MTN), with a stake worth $279.7 million reported as of the end of September. Trailing Select Equity Group was Diamond Hill Capital, which amassed a stake valued at $86.5 million. 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 one would reasonably expect, some big names have been driving this bullishness. 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 made a $31 million investment in the stock during the quarter. The other funds with new positions in the stock are Jack Woodruff’s Candlestick Capital Management, Ricky Sandler’s Eminence Capital, and James Woodson Davis’s Woodson Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Vail Resorts, Inc. (NYSE:MTN) but similarly valued. These stocks are Snap-on Incorporated (NYSE:SNA), Gaming and Leisure Properties Inc (NASDAQ:GLPI), Newell Brands Inc. (NASDAQ:NWL), and Bright Horizons Family Solutions Inc (NYSE:BFAM). This group of stocks’ market values are closest to MTN’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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. (NASDAQ: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 returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on MTN as the stock returned 34.3% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.