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

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 823 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Hilton Worldwide Holdings Inc (NYSE:HLT) in this article.

Hilton Worldwide Holdings Inc (NYSE:HLT) investors should be aware of an increase in enthusiasm from smart money recently. Hilton Worldwide Holdings Inc (NYSE:HLT) was in 53 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 57. There were 43 hedge funds in our database with HLT holdings at the end of March. Our calculations also showed that HLT isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

In the eyes of most shareholders, hedge funds are viewed as underperforming, outdated investment tools of years past. While there are over 8000 funds with their doors open at present, Our experts hone in on the aristocrats of this group, about 850 funds. Most estimates calculate that this group of people orchestrate bulk of the smart money’s total asset base, and by keeping track of their inimitable investments, Insider Monkey has identified various investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Andreas Halvorsen

Andreas Halvorsen of Viking Global

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind let’s take a look at the latest hedge fund action encompassing Hilton Worldwide Holdings Inc (NYSE:HLT).

How have hedgies been trading Hilton Worldwide Holdings Inc (NYSE:HLT)?

At the end of the second quarter, a total of 53 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HLT over the last 20 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

The largest stake in Hilton Worldwide Holdings Inc (NYSE:HLT) was held by Pershing Square, which reported holding $1012.8 million worth of stock at the end of September. It was followed by D1 Capital Partners with a $829 million position. Other investors bullish on the company included Eagle Capital Management, Viking Global, and Long Pond Capital. In terms of the portfolio weights assigned to each position Pelham Capital allocated the biggest weight to Hilton Worldwide Holdings Inc (NYSE:HLT), around 17.46% of its 13F portfolio. Pershing Square is also relatively very bullish on the stock, designating 13.06 percent of its 13F equity portfolio to HLT.

As one would reasonably expect, key money managers have jumped into Hilton Worldwide Holdings Inc (NYSE:HLT) headfirst. Viking Global, managed by Andreas Halvorsen, created the biggest position in Hilton Worldwide Holdings Inc (NYSE:HLT). Viking Global had $534.2 million invested in the company at the end of the quarter. Eric W. Mandelblatt and Gaurav Kapadia’s Soroban Capital Partners also made a $115.3 million investment in the stock during the quarter. The other funds with brand new HLT positions are Gabriel Plotkin’s Melvin Capital Management, Brian J. Higgins’s King Street Capital, and Anand Desai’s Darsana Capital Partners.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Hilton Worldwide Holdings Inc (NYSE:HLT) but similarly valued. We will take a look at Rogers Communications Inc. (NYSE:RCI), D.R. Horton, Inc. (NYSE:DHI), Southwest Airlines Co. (NYSE:LUV), Corteva, Inc. (NYSE:CTVA), Old Dominion Freight Line (NASDAQ:ODFL), ZoomInfo Technologies Inc. (NASDAQ:ZI), and PPL Corporation (NYSE:PPL). All of these stocks’ market caps resemble HLT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RCI 16 340545 0
DHI 66 2088308 1
LUV 56 873793 11
CTVA 39 775291 3
ODFL 35 480042 2
ZI 24 157040 24
PPL 25 159807 -3
Average 37.3 696404 5.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $696 million. That figure was $4467 million in HLT’s case. D.R. Horton, Inc. (NYSE:DHI) is the most popular stock in this table. On the other hand Rogers Communications Inc. (NYSE:RCI) is the least popular one with only 16 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 74.9. 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 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 30% in 2020 through October 23rd and still beat the market by 21 percentage points. Hedge funds were also right about betting on HLT as the stock returned 28.8% since the end of Q2 (through 10/23) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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