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Is Carnival Corporation (CCL) Going to Burn These Hedge Funds?

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider Carnival Corporation (NYSE:CCL) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Is Carnival Corporation (NYSE:CCL) an excellent stock to buy now? The best stock pickers were in a bearish mood. The number of bullish hedge fund bets dropped by 3 recently. Carnival Corporation (NYSE:CCL) was in 44 hedge funds' portfolios at the end of March. The all time high for this statistic is 53. Our calculations also showed that CCL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Matthew Halbower Pentwater Capital
Matthew Halbower Pentwater Capital

Matthew Halbower of Pentwater Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 let's check out the new hedge fund action regarding Carnival Corporation (NYSE:CCL).

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

At Q1's end, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in CCL over the last 23 quarters. With hedgies' sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Is CCL A Good Stock To Buy?
Is CCL A Good Stock To Buy?

Among these funds, Rokos Capital Management held the most valuable stake in Carnival Corporation (NYSE:CCL), which was worth $147 million at the end of the fourth quarter. On the second spot was Alkeon Capital Management which amassed $119.9 million worth of shares. Jericho Capital Asset Management, Citadel Investment Group, and D E Shaw 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 Covalent Capital Partners allocated the biggest weight to Carnival Corporation (NYSE:CCL), around 6.01% of its 13F portfolio. Jericho Capital Asset Management is also relatively very bullish on the stock, dishing out 3.08 percent of its 13F equity portfolio to CCL.

Judging by the fact that Carnival Corporation (NYSE:CCL) has witnessed falling interest from the aggregate hedge fund industry, we can see that there exists a select few hedge funds who were dropping their entire stakes heading into Q2. It's worth mentioning that Stanley Druckenmiller's Duquesne Capital dropped the biggest position of the "upper crust" of funds followed by Insider Monkey, worth about $57.3 million in stock, and John Overdeck and David Siegel's Two Sigma Advisors was right behind this move, as the fund said goodbye to about $56.8 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 3 funds heading into Q2.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Carnival Corporation (NYSE:CCL) but similarly valued. We will take a look at AvalonBay Communities Inc (NYSE:AVB), Copart, Inc. (NASDAQ:CPRT), Consolidated Edison, Inc. (NYSE:ED), Datadog, Inc. (NASDAQ:DDOG), Credit Suisse Group AG (NYSE:CS), TELUS Corporation (NYSE:TU), and Etsy Inc (NASDAQ:ETSY). This group of stocks' market values are closest to CCL's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVB,40,630728,8 CPRT,49,966765,3 ED,22,196630,-10 DDOG,44,2383744,-8 CS,13,35775,2 TU,18,200045,4 ETSY,53,1645009,-3 Average,34.1,865528,-0.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.1 hedge funds with bullish positions and the average amount invested in these stocks was $866 million. That figure was $594 million in CCL's case. Etsy Inc (NASDAQ:ETSY) is the most popular stock in this table. On the other hand Credit Suisse Group AG (NYSE:CS) is the least popular one with only 13 bullish hedge fund positions. Carnival Corporation (NYSE:CCL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CCL is 65.7. 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 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on CCL, though not to the same extent, as the stock returned 6.2% since Q1 (through June 18th) and outperformed the market as well.

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