What do Hedge Funds Think of These High Fliers That Just Reported Earnings?

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Analysts expected Vail Resorts, Inc. (NYSE:MTN) to lose $1.88 per share on revenues of $150.47 million in the fourth quarter because ski demand is traditionally lower in summer. They were also concerned the strong dollar and a volatile stock market could lower demand. However, Vail Resorts reported a loss of $1.92 per share on revenues of $162.08 million instead.

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Vail Resorts, Inc. (NYSE:MTN)’s growth is strong, with reported revenue coming in higher than estimates. The company is also rapidly expanding operations. Vail bought an Australian resort in June and constructed the world’s largest ski resort in Utah this year. Because of the acquisitions and expansions, management expects resort EBITDA to be $405-$430 million for fiscal year 2016 versus resort EBITDA of $349.5 million for fiscal year 2015.

Hedge funds are mixed on Vail Resorts. Although the number of funds long Vail Resorts declined to 23 from 29 in the prior quarter, the total value of hedge fund holdings increased to $443 million from $440 million. Among the hedge funds that increased their positions in the second quarter was Joel Greenblatt’s Gotham Asset Management, which increased its holdings by 1,372% to 220,792 shares. Mason Hawkins‘ Southeastern Asset Management kept its holdings the same at 2.39 million shares.

Shares of Vail Resorts are up 19.3% year to date and trade at a forward PE of 31.23 versus the S&P 500’s forward PE of 16.5 because analysts expect Vail’s EPS to grow by an average of 53% over the next five years. If Vail’s dividend growth can match its expected earnings growth, Vail shares have significant upside from here.

Disclosure: None

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