Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Hilton Grand Vacations Inc. (NYSE:HGV) based on that data.
Hilton Grand Vacations Inc. (NYSE:HGV) has experienced a decrease in hedge fund sentiment in recent months. HGV was in 29 hedge funds’ portfolios at the end of March. There were 46 hedge funds in our database with HGV holdings at the end of the previous quarter. Our calculations also showed that HGV isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Dmitry Balyasny of Balyasny Asset Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to check out the new hedge fund action encompassing Hilton Grand Vacations Inc. (NYSE:HGV).
What does smart money think about Hilton Grand Vacations Inc. (NYSE:HGV)?
Heading into the second quarter of 2020, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -37% from the fourth quarter of 2019. By comparison, 37 hedge funds held shares or bullish call options in HGV a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Hilton Grand Vacations Inc. (NYSE:HGV) was held by Zimmer Partners, which reported holding $120.8 million worth of stock at the end of September. It was followed by Long Pond Capital with a $74.7 million position. Other investors bullish on the company included P2 Capital Partners, Centerbridge Partners, and 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 15.68% of its 13F portfolio. P2 Capital Partners is also relatively very bullish on the stock, designating 8.48 percent of its 13F equity portfolio to HGV.
Seeing as Hilton Grand Vacations Inc. (NYSE:HGV) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there exists a select few hedge funds who were dropping their positions entirely heading into Q4. At the top of the heap, Noam Gottesman’s GLG Partners dumped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $20.3 million in stock, and Renaissance Technologies was right behind this move, as the fund cut about $8.8 million worth. These transactions are interesting, as total hedge fund interest dropped by 17 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Hilton Grand Vacations Inc. (NYSE:HGV) but similarly valued. We will take a look at Glaukos Corporation (NYSE:GKOS), InVitae Corporation (NYSE:NVTA), 2U Inc (NASDAQ:TWOU), and Dicerna Pharmaceuticals Inc (NASDAQ:DRNA). This group of stocks’ market values are closest to HGV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GKOS | 15 | 83596 | -1 |
| NVTA | 10 | 225622 | -3 |
| TWOU | 14 | 157558 | -4 |
| DRNA | 25 | 281860 | -6 |
| Average | 16 | 187159 | -3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $187 million. That figure was $513 million in HGV’s case. Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) is the most popular stock in this table. On the other hand InVitae Corporation (NYSE:NVTA) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Hilton Grand Vacations Inc. (NYSE:HGV) is more popular among hedge funds. 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on HGV as the stock returned 36.6% so far in Q2 (through the end of May) 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.
