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Wyndham Destinations, Inc. (WYND): Hedge Funds Checking Out

In this article you are going to find out whether hedge funds think Wyndham Destinations, Inc. (NYSE:WYND) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Wyndham Destinations, Inc. (NYSE:WYND) has seen a decrease in hedge fund sentiment in recent months. Our calculations also showed that WYND isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Harold Levy Iridian Asset Management

Harold Levy of Iridian Asset Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a peek at the key hedge fund action surrounding Wyndham Destinations, Inc. (NYSE:WYND).

What have hedge funds been doing with Wyndham Destinations, Inc. (NYSE:WYND)?

At Q1’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards WYND over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Iridian Asset Management held the most valuable stake in Wyndham Destinations, Inc. (NYSE:WYND), which was worth $93 million at the end of the third quarter. On the second spot was Rima Senvest Management which amassed $26.9 million worth of shares. Arrowstreet Capital, Nantahala Capital Management, and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Rima Senvest Management allocated the biggest weight to Wyndham Destinations, Inc. (NYSE:WYND), around 3.15% of its 13F portfolio. Iridian Asset Management is also relatively very bullish on the stock, setting aside 2.25 percent of its 13F equity portfolio to WYND.

Judging by the fact that Wyndham Destinations, Inc. (NYSE:WYND) has faced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of money managers that slashed their full holdings by the end of the first quarter. At the top of the heap, Stuart J. Zimmer’s Zimmer Partners said goodbye to the biggest stake of the 750 funds followed by Insider Monkey, valued at close to $25 million in stock, and Mark Travis’s Intrepid Capital Management was right behind this move, as the fund said goodbye to about $5.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 3 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Wyndham Destinations, Inc. (NYSE:WYND) but similarly valued. These stocks are Fulton Financial Corp (NASDAQ:FULT), Eidos Therapeutics, Inc. (NASDAQ:EIDX), AMTD International Inc. (NYSE:HKIB), and CommVault Systems, Inc. (NASDAQ:CVLT). All of these stocks’ market caps resemble WYND’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FULT 14 12965 0
EIDX 12 271572 -8
HKIB 1 15174 0
CVLT 18 463730 -15
Average 11.25 190860 -5.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $191 million. That figure was $200 million in WYND’s case. CommVault Systems, Inc. (NASDAQ:CVLT) is the most popular stock in this table. On the other hand AMTD International Inc. (NYSE:HKIB) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Wyndham Destinations, Inc. (NYSE:WYND) is more popular among hedge funds. 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 returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on WYND as the stock returned 61.6% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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