Park Hotels & Resorts (PK): Here Is What Longleaf Partners Says About It

Longleaf Partners Fund, a suite of mutual funds and UCITS funds managed by Southeastern Asset Management, recently published its Q4 investor letter – you can download a copy here. The fund discussed Park Hotels & Resorts (NYSE: PK) as well as few companies in the letter. In this article, we’re taking a look at the fund’s comments about Park Hotels, a $6.35-billion market cap real estate investment trust focused on hotel properties.

Here is what Longleaf said about the company:

Park Hotels (10%, 0.43%, -18%, -0.78%), the owner of Hawaiian Village and other Hilton properties, was the primary positive contributor in 2018 after our first quarter purchase of the stock.

The business delivered mid-single-digit comparable revenue per available room (RevPAR) growth despite hurricanes near its Florida and Hawaiian hotels. Early in the year, CEO Tom Baltimore sold multiple properties above our appraisal, and the company has additional opportunity to realize more value out of the portfolio’s assets.

Recent transactions for top-tier luxury properties support significantly larger multiples than the stock price implies for Park’s trophy properties like the Hawaiian Village.

Despite good results in its second year as a stand-alone company, Park still trades at a meaningful discount to peers with what we view as inferior properties.

Credit: Park Hotels & Resorts

Park Hotels & Resorts (NYSE: PK) is the second-largest publicly traded lodging REIT with a portfolio of market-leading hotels and resorts. Its portfolio consists of 52 hotels and resorts with over 30,000 rooms. The company has shown a positive performance since the start of the year. Shares are up more than 24% year-to-date. Over the past six months, the stock has tumbled 4.99%.

Analysts polled by FactSet have a consensus average rating of ‘Overweight’ for the Park’s stock, which was trading at $31.53 at the time of writing this article. The analysts have a consensus average price target of $30.77 for PK.

Now take a look at hedge funds sentiment about Park. At the end of the third quarter of 2018, 15 funds – among more than 700 covered by Insider Monkey – held stakes in the company. While 14 funds held the stock at the end of the second quarter.

Disclosure: none