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Hedge Funds Dipping Their Toes Into Hilton Grand Vacations Inc. (HGV)

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Hilton Grand Vacations Inc. (NYSE:HGV) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Hilton Grand Vacations Inc. (NYSE:HGV) has seen an increase in support from the world’s most elite money managers lately. Hilton Grand Vacations Inc. (NYSE:HGV) was in 30 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 46. Our calculations also showed that HGV isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Fred DiSanto Ancora Advisors

Fred DiSanto of Ancora Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to view the recent hedge fund action regarding Hilton Grand Vacations Inc. (NYSE:HGV).

How have hedgies been trading Hilton Grand Vacations Inc. (NYSE:HGV)?

Heading into the third quarter of 2020, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HGV over the last 20 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.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Zimmer Partners, managed by Stuart J. Zimmer, holds the most valuable position in Hilton Grand Vacations Inc. (NYSE:HGV). Zimmer Partners has a $138.2 million position in the stock, comprising 1.9% of its 13F portfolio. Sitting at the No. 2 spot is P2 Capital Partners, managed by Claus Moller, which holds a $82.6 million position; the fund has 6.9% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions encompass Mark T. Gallogly’s Centerbridge Partners, Michael Kahan and Jeremy Kahan’s North Peak Capital and Richard Mashaal’s Rima Senvest Management. In terms of the portfolio weights assigned to each position Centerbridge Partners allocated the biggest weight to Hilton Grand Vacations Inc. (NYSE:HGV), around 12.82% of its 13F portfolio. North Peak Capital is also relatively very bullish on the stock, designating 12.2 percent of its 13F equity portfolio to HGV.

As one would reasonably expect, specific money managers have jumped into Hilton Grand Vacations Inc. (NYSE:HGV) headfirst. Parsifal Capital Management, managed by David Zorub, established the largest position in Hilton Grand Vacations Inc. (NYSE:HGV). Parsifal Capital Management had $10.2 million invested in the company at the end of the quarter. Austin Wiggins Hopper’s AWH Capital also initiated a $0.7 million position during the quarter. The following funds were also among the new HGV investors: Michael Gelband’s ExodusPoint Capital, Mark McMeans’s Brasada Capital Management, and Frederick DiSanto’s Ancora Advisors.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Hilton Grand Vacations Inc. (NYSE:HGV) but similarly valued. These stocks are Hilltop Holdings Inc. (NYSE:HTH), 8×8, Inc. (NYSE:EGHT), Onto Innovation Inc. (NYSE:ONTO), Compass Minerals International, Inc. (NYSE:CMP), Osisko Gold Royalties Ltd (NYSE:OR), Callaway Golf Company (NYSE:ELY), and Big Lots, Inc. (NYSE:BIG). All of these stocks’ market caps resemble HGV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HTH 23 107835 8
EGHT 21 417819 1
ONTO 17 161796 6
CMP 18 62058 2
OR 15 143014 2
ELY 24 277158 1
BIG 22 247501 7
Average 20 202454 3.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $202 million. That figure was $555 million in HGV’s case. Callaway Golf Company (NYSE:ELY) is the most popular stock in this table. On the other hand Osisko Gold Royalties Ltd (NYSE:OR) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Hilton Grand Vacations Inc. (NYSE:HGV) is more popular among hedge funds. Our overall hedge fund sentiment score for HGV is 75.6. 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. 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 23.8% in 2020 through September 14th but still managed to beat the market by 17.6 percentage points. Hedge funds were also right about betting on HGV as the stock returned 18.2% since the end of June 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.

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