Is Marriott Vacations Worldwide Corporation (VAC) Going to Burn These Hedge Funds?

In this article we will check out the progression of hedge fund sentiment towards Marriott Vacations Worldwide Corporation (NYSE:VAC) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Hedge fund interest in Marriott Vacations Worldwide Corporation (NYSE:VAC) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare VAC to other stocks including UFP Industries, Inc. (NASDAQ:UFPI), NCR Corporation (NYSE:NCR), and BlackBerry Limited (NYSE:BB) to get a better sense of its popularity.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Wil Harkey Nantahala Capital

Wil Harkey of Nantahala Capital 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. With all of this in mind we’re going to review the key hedge fund action surrounding Marriott Vacations Worldwide Corporation (NYSE:VAC).

How have hedgies been trading Marriott Vacations Worldwide Corporation (NYSE:VAC)?

At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VAC over the last 18 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Richard Mashaal’s Rima Senvest Management has the number one position in Marriott Vacations Worldwide Corporation (NYSE:VAC), worth close to $111.4 million, comprising 13% of its total 13F portfolio. On Rima Senvest Management’s heels is Iridian Asset Management, led by David Cohen and Harold Levy, holding a $65.5 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions include Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, John Khoury’s Long Pond Capital and Brad Stephens’s Six Columns Capital. In terms of the portfolio weights assigned to each position Rima Senvest Management allocated the biggest weight to Marriott Vacations Worldwide Corporation (NYSE:VAC), around 13.05% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, designating 2.01 percent of its 13F equity portfolio to VAC.

Judging by the fact that Marriott Vacations Worldwide Corporation (NYSE:VAC) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of fund managers that slashed their full holdings heading into Q4. Interestingly, Eric F. Billings’s Billings Capital Management said goodbye to the biggest stake of the 750 funds watched by Insider Monkey, worth an estimated $15.7 million in stock, and Brad Stephens’s Six Columns Capital was right behind this move, as the fund dumped about $5.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Marriott Vacations Worldwide Corporation (NYSE:VAC) but similarly valued. We will take a look at UFP Industries, Inc. (NASDAQ:UFPI), NCR Corporation (NYSE:NCR), BlackBerry Limited (NYSE:BB), and Tempur Sealy International Inc. (NYSE:TPX). This group of stocks’ market values are similar to VAC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UFPI 17 67371 -10
NCR 32 155675 0
BB 22 280349 -5
TPX 38 501858 -4
Average 27.25 251313 -4.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $251 million. That figure was $299 million in VAC’s case. Tempur Sealy International Inc. (NYSE:TPX) is the most popular stock in this table. On the other hand UFP Industries, Inc. (NASDAQ:UFPI) is the least popular one with only 17 bullish hedge fund positions. Marriott Vacations Worldwide Corporation (NYSE:VAC) is not the least popular stock in this group but hedge fund interest is still below average. 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 gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on VAC as the stock returned 70.2% during the second quarter and outperformed the market by an even larger margin.

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