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Hedge Funds Are Dumping Royal Caribbean Cruises Ltd (RCL)

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Is Royal Caribbean Cruises Ltd (NYSE:RCL) a buy here? The best stock pickers are turning less bullish. The number of bullish hedge fund bets shrunk by 13 in recent months. RCL was in 26 hedge funds’ portfolios at the end of September. There were 39 hedge funds in our database with RCL positions at the end of the previous quarter. At the end of this article we will also compare RCL to other stocks including Agilent Technologies Inc. (NYSE:A), Interactive Brokers Group, Inc. (NASDAQ:IBKR), and Viacom, Inc. (NASDAQ:VIAB) to get a better sense of its popularity.

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Most Expensive Cruises in the World

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With all of this in mind, we’re going to take a look at the latest action encompassing Royal Caribbean Cruises Ltd (NYSE:RCL).

How have hedgies been trading Royal Caribbean Cruises Ltd (NYSE:RCL)?

At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a plunge of 33% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
RCL
When looking at the institutional investors followed by Insider Monkey, Principal Global Investors’s Columbus Circle Investors has the most valuable position in Royal Caribbean Cruises Ltd (NYSE:RCL), worth close to $98.6 million, corresponding to 1.1% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds an $82.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers with similar optimism contain Richard Barrera’s Roystone Capital Partners, John W. Rogers’s Ariel Investments and Brett Barakett’s Tremblant Capital.

Because Royal Caribbean Cruises Ltd (NYSE:RCL) has experienced a decline in interest from hedge fund managers, we can see that there exists a select few hedgies that decided to sell off their full holdings heading into Q4. Interestingly, Ken Griffin’s Citadel Investment Group dropped the biggest position of the “upper crust” of funds followed by Insider Monkey, totaling close to $12.8 million worth of options. Matthew Tewksbury’s fund, Stevens Capital Management, also sold off its stock, about $9.9 million worth of RCL shares. These bearish behaviors are interesting, as total hedge fund interest was cut by 13 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Royal Caribbean Cruises Ltd (NYSE:RCL) but similarly valued. These stocks are Agilent Technologies Inc. (NYSE:A), Interactive Brokers Group, Inc. (NASDAQ:IBKR), Viacom, Inc. (NASDAQ:VIAB), and Micron Technology, Inc. (NASDAQ:MU). All of these stocks’ market caps match RCL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
A 41 1395703 1
IBKR 26 588586 -4
VIAB 44 1073033 3
MU 68 1866318 1

As you can see these stocks had an average of 45 hedge funds with bullish positions and the average amount invested in these stocks was $1.23 billion. That figure was $821 million in RCL’s case. Micron Technology, Inc. (NASDAQ:MU) is the most popular stock in this table. On the other hand Interactive Brokers Group, Inc. (NASDAQ:IBKR) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Royal Caribbean Cruises Ltd (NYSE:RCL) is even less popular than IBKR. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: none.

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