Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Hilton Worldwide Holdings Inc (NYSE:HLT).
Is Hilton (HLT) a good stock to buy now? Hedge funds were becoming hopeful. The number of bullish hedge fund bets increased by 4 recently. Hilton Worldwide Holdings Inc (NYSE:HLT) was in 57 hedge funds’ portfolios at the end of September. The all time high for this statistics is 57. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that HLT isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey 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. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to analyze the fresh hedge fund action regarding Hilton Worldwide Holdings Inc (NYSE:HLT).
What have hedge funds been doing with Hilton Worldwide Holdings Inc (NYSE:HLT)?
Heading into the fourth quarter of 2020, a total of 57 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HLT over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Pershing Square, managed by Bill Ackman, holds the most valuable position in Hilton Worldwide Holdings Inc (NYSE:HLT). Pershing Square has a $1.1401 billion position in the stock, comprising 12.9% of its 13F portfolio. The second largest stake is held by Eagle Capital Management, led by Boykin Curry, holding a $791.6 million position; the fund has 2.8% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism consist of Andreas Halvorsen’s Viking Global, Daniel Sundheim’s D1 Capital Partners and Ross Turner’s Pelham Capital. In terms of the portfolio weights assigned to each position Pelham Capital allocated the biggest weight to Hilton Worldwide Holdings Inc (NYSE:HLT), around 14.65% of its 13F portfolio. Pershing Square is also relatively very bullish on the stock, earmarking 12.92 percent of its 13F equity portfolio to HLT.
As industrywide interest jumped, some big names have jumped into Hilton Worldwide Holdings Inc (NYSE:HLT) headfirst. Farallon Capital, initiated the most outsized position in Hilton Worldwide Holdings Inc (NYSE:HLT). Farallon Capital had $131.9 million invested in the company at the end of the quarter. David Cohen and Harold Levy’s Iridian Asset Management also initiated a $52.6 million position during the quarter. The other funds with brand new HLT positions are Emanuel J. Friedman’s EJF Capital, Joe DiMenna’s ZWEIG DIMENNA PARTNERS, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now review hedge fund activity in other stocks similar to Hilton Worldwide Holdings Inc (NYSE:HLT). We will take a look at Palo Alto Networks Inc (NYSE:PANW), Roku, Inc. (NASDAQ:ROKU), LyondellBasell Industries NV (NYSE:LYB), Verisign, Inc. (NASDAQ:VRSN), ZTO Express (Cayman) Inc. (NYSE:ZTO), Sirius XM Holdings Inc (NASDAQ:SIRI), and Church & Dwight Co., Inc. (NYSE:CHD). This group of stocks’ market valuations are similar to HLT’s market valuation.
|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 41.4 hedge funds with bullish positions and the average amount invested in these stocks was $1817 million. That figure was $5110 million in HLT’s case. Palo Alto Networks Inc (NYSE:PANW) is the most popular stock in this table. On the other hand ZTO Express (Cayman) Inc. (NYSE:ZTO) is the least popular one with only 22 bullish hedge fund positions. Hilton Worldwide Holdings Inc (NYSE:HLT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HLT is 86.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on HLT as the stock returned 25.1% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.