How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Park Hotels & Resorts Inc. (NYSE:PK).
Park Hotels & Resorts Inc. (NYSE:PK) was in 22 hedge funds’ portfolios at the end of September. The all time high for this statistic is 34. PK has experienced an increase in hedge fund sentiment in recent months. There were 19 hedge funds in our database with PK holdings at the end of June. Our calculations also showed that PK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s view the new hedge fund action encompassing Park Hotels & Resorts Inc. (NYSE:PK).
Do Hedge Funds Think PK Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in PK over the last 25 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.
Among these funds, D E Shaw held the most valuable stake in Park Hotels & Resorts Inc. (NYSE:PK), which was worth $21.1 million at the end of the third quarter. On the second spot was Capital Growth Management which amassed $21.1 million worth of shares. Kettle Hill Capital Management, Waterfront Capital Partners, and Masterton 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 Masterton Capital Management allocated the biggest weight to Park Hotels & Resorts Inc. (NYSE:PK), around 12.26% of its 13F portfolio. LDR Capital is also relatively very bullish on the stock, earmarking 4.34 percent of its 13F equity portfolio to PK.
Now, some big names were breaking ground themselves. Waterfront Capital Partners, managed by Eduardo Abush, created the most outsized position in Park Hotels & Resorts Inc. (NYSE:PK). Waterfront Capital Partners had $19.6 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $15.9 million investment in the stock during the quarter. The following funds were also among the new PK investors: John Khoury’s Long Pond Capital, Peter Algert’s Algert Global, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Park Hotels & Resorts Inc. (NYSE:PK) but similarly valued. We will take a look at Q2 Holdings Inc (NYSE:QTWO), Flowserve Corporation (NYSE:FLS), Evoqua Water Technologies Corp. (NYSE:AQUA), Hamilton Lane Incorporated (NASDAQ:HLNE), ChampionX Corporation (NASDAQ:CHX), Virtu Financial Inc (NASDAQ:VIRT), and Revolve Group, Inc. (NYSE:RVLV). All of these stocks’ market caps resemble PK’s market cap.
|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 22 hedge funds with bullish positions and the average amount invested in these stocks was $255 million. That figure was $202 million in PK’s case. ChampionX Corporation (NASDAQ:CHX) is the most popular stock in this table. On the other hand Virtu Financial Inc (NASDAQ:VIRT) is the least popular one with only 15 bullish hedge fund positions. Park Hotels & Resorts Inc. (NYSE:PK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PK is 52.4. 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 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately PK wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); PK investors were disappointed as the stock returned -1.4% since the end of September (through 12/31) 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.
Follow Park Hotels & Resorts Inc. (NYSE:PK)
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Disclosure: None. This article was originally published at Insider Monkey.