Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Is Vail Resorts, Inc. (NYSE:MTN) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Vail Resorts, Inc. (NYSE:MTN) has experienced a decrease in enthusiasm from smart money lately. MTN was in 33 hedge funds’ portfolios at the end of December. There were 39 hedge funds in our database with MTN holdings at the end of the previous quarter. Our calculations also showed that MTN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In today’s marketplace there are many indicators investors employ to grade publicly traded companies. A couple of the less known indicators are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the elite investment managers can outpace the S&P 500 by a superb margin (see the details here).
Lee Ainslie of Maverick Capital
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a gander at the recent hedge fund action regarding Vail Resorts, Inc. (NYSE:MTN).
How are hedge funds trading Vail Resorts, Inc. (NYSE:MTN)?
Heading into the first quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from one quarter earlier. On the other hand, there were a total of 26 hedge funds with a bullish position in MTN a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Vail Resorts, Inc. (NYSE:MTN) was held by Select Equity Group, which reported holding $284.8 million worth of stock at the end of September. It was followed by Diamond Hill Capital with a $114.6 million position. Other investors bullish on the company included Sandler Capital Management, PEAK6 Capital Management, and Shellback Capital. In terms of the portfolio weights assigned to each position White Elm Capital allocated the biggest weight to Vail Resorts, Inc. (NYSE:MTN), around 3.78% of its 13F portfolio. Sandler Capital Management is also relatively very bullish on the stock, earmarking 3.11 percent of its 13F equity portfolio to MTN.
Judging by the fact that Vail Resorts, Inc. (NYSE:MTN) has experienced falling interest from the smart money, we can see that there is a sect of funds that decided to sell off their positions entirely heading into Q4. Intriguingly, Steve Cohen’s Point72 Asset Management dumped the biggest stake of the “upper crust” of funds watched by Insider Monkey, comprising about $25.8 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund dumped about $24.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 6 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Vail Resorts, Inc. (NYSE:MTN). These stocks are Black Knight, Inc. (NYSE:BKI), NICE Ltd. (NASDAQ:NICE), Apache Corporation (NYSE:APA), and DXC Technology Company (NYSE:DXC). This group of stocks’ market valuations are closest to MTN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BKI | 31 | 529645 | -14 |
| NICE | 19 | 425511 | 2 |
| APA | 34 | 608891 | 6 |
| DXC | 47 | 1481279 | 6 |
| Average | 32.75 | 761332 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $761 million. That figure was $552 million in MTN’s case. DXC Technology Company (NYSE:DXC) is the most popular stock in this table. On the other hand NICE Ltd. (NASDAQ:NICE) is the least popular one with only 19 bullish hedge fund positions. Vail Resorts, Inc. (NYSE:MTN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately MTN wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MTN were disappointed as the stock returned -35.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
