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SeaWorld Entertainment Inc (SEAS): Are Hedge Funds Right About This Stock?

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 30 S&P 500 stocks among hedge funds at the end of September 2018 returned an average of 6.7% through November 15th whereas the S&P 500 Index ETF gained only 2.6% during the same period. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at SeaWorld Entertainment Inc (NYSE:SEAS) from the perspective of those elite funds.

Is SeaWorld Entertainment Inc (NYSE:SEAS) a healthy stock for your portfolio? Money managers are turning bullish. The number of bullish hedge fund bets moved up by 6 in recent months. Our calculations also showed that SEAS isn’t among the 30 most popular stocks among hedge funds. SEAS was in 22 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with SEAS positions at the end of the previous quarter.

In today’s marketplace there are a large number of tools stock market investors put to use to size up stocks. A couple of the best tools are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best money managers can outperform the market by a superb amount (see the details here).

Dmitry Balyasny

We’re going to check out the fresh hedge fund action surrounding SeaWorld Entertainment Inc (NYSE:SEAS).

Hedge fund activity in SeaWorld Entertainment Inc (NYSE:SEAS)

At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SEAS over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

SEAS_dec2018

Of the funds tracked by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the most valuable position in SeaWorld Entertainment Inc (NYSE:SEAS). D E Shaw has a $60.7 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $55.7 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers that are bullish contain Israel Englander’s Millennium Management, and Jim Simons’s Renaissance Technologies.

As one would reasonably expect, specific money managers have been driving this bullishness. D E Shaw, managed by D. E. Shaw, created the largest position in SeaWorld Entertainment Inc (NYSE:SEAS). D E Shaw had $60.7 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $36.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Joseph A. Jolson’s Harvest Capital Strategies, and Peter Muller’s PDT Partners.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as SeaWorld Entertainment Inc (NYSE:SEAS) but similarly valued. These stocks are Diamond Offshore Drilling Inc (NYSE:DO), Murphy USA Inc. (NYSE:MUSA), Alarm.Com Holdings Inc (NASDAQ:ALRM), and First Midwest Bancorp Inc (NASDAQ:FMBI). All of these stocks’ market caps match SEAS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DO 19 103453 0
MUSA 19 173066 3
ALRM 12 259097 -3
FMBI 8 67244 -3
Average 14.5 150715 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $151 million. That figure was $375 million in SEAS’s case. Diamond Offshore Drilling Inc (NYSE:DO) is the most popular stock in this table. On the other hand First Midwest Bancorp Inc (NASDAQ:FMBI) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks SeaWorld Entertainment Inc (NYSE:SEAS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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