Hyatt Hotels Corporation (H): Are Hedge Funds Right About This Stock?

In this article we are going to use hedge fund sentiment as a tool and determine whether Hyatt Hotels Corporation (NYSE:H) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is Hyatt Hotels Corporation (NYSE:H) a buy right now? Investors who are in the know were in a bullish mood. The number of bullish hedge fund positions advanced by 14 recently. Hyatt Hotels Corporation (NYSE:H) was in 37 hedge funds’ portfolios at the end of September. The all time high for this statistic is 38. Our calculations also showed that H isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 23 hedge funds in our database with H holdings at the end of June.

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 take a glance at the recent hedge fund action encompassing Hyatt Hotels Corporation (NYSE:H).

Do Hedge Funds Think H Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 61% from the second quarter of 2021. On the other hand, there were a total of 26 hedge funds with a bullish position in H a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

More specifically, Melvin Capital Management was the largest shareholder of Hyatt Hotels Corporation (NYSE:H), with a stake worth $354.7 million reported as of the end of September. Trailing Melvin Capital Management was Southeastern Asset Management, which amassed a stake valued at $315.7 million. Long Pond Capital, Balyasny Asset Management, and Citadel Investment Group 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 Highside Global Management allocated the biggest weight to Hyatt Hotels Corporation (NYSE:H), around 8.2% of its 13F portfolio. Southeastern Asset Management is also relatively very bullish on the stock, dishing out 5.99 percent of its 13F equity portfolio to H.

As aggregate interest increased, specific money managers were breaking ground themselves. Long Pond Capital, managed by John Khoury, created the most outsized position in Hyatt Hotels Corporation (NYSE:H). Long Pond Capital had $50.4 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $32.3 million position during the quarter. The following funds were also among the new H investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Joseph Samuels’s Islet Management, and Frank Fu’s CaaS Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Hyatt Hotels Corporation (NYSE:H) but similarly valued. We will take a look at IPG Photonics Corporation (NASDAQ:IPGP), DXC Technology Company (NYSE:DXC), Bright Horizons Family Solutions Inc (NYSE:BFAM), Gerdau SA (NYSE:GGB), Aramark (NYSE:ARMK), MKS Instruments, Inc. (NASDAQ:MKSI), and SEI Investments Company (NASDAQ:SEIC). This group of stocks’ market valuations resemble H’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $472 million. That figure was $1003 million in H’s case. DXC Technology Company (NYSE:DXC) is the most popular stock in this table. On the other hand Gerdau SA (NYSE:GGB) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Hyatt Hotels Corporation (NYSE:H) is more popular among hedge funds. Our overall hedge fund sentiment score for H is 89.2. 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 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately H wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on H were disappointed as the stock returned 2.2% since the end of the third quarter (through 11/30) 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 since 2019.

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