Were Hedge Funds Right About Hilton Worldwide Holdings Inc (HLT)?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Hilton Worldwide Holdings Inc (NYSE:HLT).

Hilton Worldwide Holdings Inc (NYSE:HLT) was in 45 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 60. HLT investors should be aware of a decrease in hedge fund interest in recent months. There were 47 hedge funds in our database with HLT positions at the end of the first quarter. Our calculations also showed that HLT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to review the fresh hedge fund action encompassing Hilton Worldwide Holdings Inc (NYSE:HLT).

Do Hedge Funds Think HLT Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 45 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HLT over the last 24 quarters. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

The largest stake in Hilton Worldwide Holdings Inc (NYSE:HLT) was held by Pershing Square, which reported holding $1539.1 million worth of stock at the end of June. It was followed by Eagle Capital Management with a $945.1 million position. Other investors bullish on the company included Arrowstreet Capital, Alkeon Capital Management, and Farallon Capital. In terms of the portfolio weights assigned to each position Pershing Square allocated the biggest weight to Hilton Worldwide Holdings Inc (NYSE:HLT), around 14.37% of its 13F portfolio. Pelham Capital is also relatively very bullish on the stock, dishing out 7.93 percent of its 13F equity portfolio to HLT.

Because Hilton Worldwide Holdings Inc (NYSE:HLT) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there were a few funds that decided to sell off their entire stakes by the end of the second quarter. It’s worth mentioning that Daniel Sundheim’s D1 Capital Partners said goodbye to the largest investment of the 750 funds watched by Insider Monkey, valued at an estimated $574.4 million in stock, and Renaissance Technologies was right behind this move, as the fund dumped about $93.2 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds by the end of the second quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Hilton Worldwide Holdings Inc (NYSE:HLT) but similarly valued. These stocks are Zimmer Biomet Holdings Inc (NYSE:ZBH), Rockwell Automation Inc. (NYSE:ROK), Chewy, Inc. (NYSE:CHWY), Stanley Black & Decker, Inc. (NYSE:SWK), First Republic Bank (NYSE:FRC), Wayfair Inc (NYSE:W), and Cloudflare, Inc. (NYSE:NET). All of these stocks’ market caps are closest to HLT’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.9 hedge funds with bullish positions and the average amount invested in these stocks was $1419 million. That figure was $4558 million in HLT’s case. Zimmer Biomet Holdings Inc (NYSE:ZBH) is the most popular stock in this table. On the other hand Rockwell Automation Inc. (NYSE:ROK) is the least popular one with only 25 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 69. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. Hedge funds were also right about betting on HLT as the stock returned 25.9% since the end of Q2 (through 11/5) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Suggested Articles:

• Top 15 Financial Centers/Cities of The World
• 15 Very High Yield Dividend Stocks Worth Checking Out
• 15 Largest Chemical Companies In The World

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