Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Park Hotels & Resorts Inc. (NYSE:PK) changed recently.
Is PK a good stock to buy now? Park Hotels & Resorts Inc. (NYSE:PK) has seen a decrease in support from the world’s most elite money managers lately. Park Hotels & Resorts Inc. (NYSE:PK) was in 17 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 34. There were 21 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 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.
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 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 scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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 go over the fresh hedge fund action regarding Park Hotels & Resorts Inc. (NYSE:PK).
Do Hedge Funds Think PK Is A Good Stock To Buy Now?
At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from the second quarter of 2020. By comparison, 21 hedge funds held shares or bullish call options in PK a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Daniel S. Och’s OZ Management has the most valuable position in Park Hotels & Resorts Inc. (NYSE:PK), worth close to $21.7 million, amounting to 0.1% of its total 13F portfolio. Coming in second is Andrew Kurita of Kettle Hill Capital Management, with a $10.5 million position; 2.5% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions consist of Michael Weinstock’s Monarch Alternative Capital, Dmitry Balyasny’s Balyasny Asset Management and David Rosen’s Rubric Capital Management. In terms of the portfolio weights assigned to each position Kettle Hill Capital Management allocated the biggest weight to Park Hotels & Resorts Inc. (NYSE:PK), around 2.49% of its 13F portfolio. Monarch Alternative Capital is also relatively very bullish on the stock, dishing out 1.5 percent of its 13F equity portfolio to PK.
Judging by the fact that Park Hotels & Resorts Inc. (NYSE:PK) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of funds that decided to sell off their entire stakes in the third quarter. Intriguingly, Greg Poole’s Echo Street Capital Management sold off the biggest stake of all the hedgies tracked by Insider Monkey, totaling close to $17.7 million in stock, and Renaissance Technologies was right behind this move, as the fund cut about $15.5 million worth. These transactions are interesting, as total hedge fund interest dropped by 4 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Park Hotels & Resorts Inc. (NYSE:PK). We will take a look at Cornerstone OnDemand, Inc. (NASDAQ:CSOD), PJT Partners Inc (NYSE:PJT), Macquarie Infrastructure Corporation (NYSE:MIC), Umpqua Holdings Corp (NASDAQ:UMPQ), ADC Therapeutics SA (NYSE:ADCT), DCP Midstream LP (NYSE:DCP), and Patterson Companies, Inc. (NASDAQ:PDCO). This group of stocks’ market caps are similar to 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 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $265 million. That figure was $77 million in PK’s case. Macquarie Infrastructure Corporation (NYSE:MIC) is the most popular stock in this table. On the other hand DCP Midstream LP (NYSE:DCP) is the least popular one with only 3 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 41. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on PK as the stock returned 67.1% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.