Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of SeaWorld Entertainment Inc (NYSE:SEAS) based on that data.
SeaWorld Entertainment Inc (NYSE:SEAS) was in 27 hedge funds' portfolios at the end of the first quarter of 2020. SEAS shareholders have witnessed a decrease in hedge fund sentiment lately. There were 39 hedge funds in our database with SEAS holdings at the end of the previous quarter. Our calculations also showed that SEAS 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_338420" align="aligncenter" width="398"] Parag Vora of HG Vora Capital Management[/caption]
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. With all of this in mind we're going to view the latest hedge fund action regarding SeaWorld Entertainment Inc (NYSE:SEAS).
What have hedge funds been doing with SeaWorld Entertainment Inc (NYSE:SEAS)?
At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -31% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SEAS over the last 18 quarters. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Hill Path Capital, managed by Scott Ross, holds the biggest position in SeaWorld Entertainment Inc (NYSE:SEAS). Hill Path Capital has a $299.8 million position in the stock, comprising 91.4% of its 13F portfolio. Sitting at the No. 2 spot is HG Vora Capital Management, managed by Parag Vora, which holds a $57.9 million position; 5.6% of its 13F portfolio is allocated to the stock. Other peers that are bullish contain Renaissance Technologies, Jeffrey Jacobowitz's Simcoe Capital Management and Mubadala Investment's MIC Capital Partners. In terms of the portfolio weights assigned to each position Hill Path Capital allocated the biggest weight to SeaWorld Entertainment Inc (NYSE:SEAS), around 91.43% of its 13F portfolio. Lionstone Capital Management is also relatively very bullish on the stock, setting aside 6.58 percent of its 13F equity portfolio to SEAS.
Seeing as SeaWorld Entertainment Inc (NYSE:SEAS) has experienced a decline in interest from the smart money, it's safe to say that there is a sect of money managers that elected to cut their full holdings last quarter. It's worth mentioning that Gabriel Plotkin's Melvin Capital Management dumped the biggest investment of the 750 funds watched by Insider Monkey, totaling close to $42 million in stock. Guy Shahar's fund, DSAM Partners, also dropped its stock, about $18.5 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 12 funds last quarter.
Let's check out hedge fund activity in other stocks similar to SeaWorld Entertainment Inc (NYSE:SEAS). We will take a look at Encore Wire Corporation (NASDAQ:WIRE), Esperion Therapeutics, Inc. (NASDAQ:ESPR), Dillard's, Inc. (NYSE:DDS), and Diversified Healthcare Trust (NASDAQ:DHC). This group of stocks' market values are similar to SEAS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WIRE,14,33051,1 ESPR,18,190538,3 DDS,13,125316,-7 DHC,10,12170,1 Average,13.75,90269,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $456 million in SEAS's case. Esperion Therapeutics, Inc. (NASDAQ:ESPR) is the most popular stock in this table. On the other hand Diversified Healthcare Trust (NASDAQ:DHC) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks SeaWorld Entertainment Inc (NYSE:SEAS) 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on SEAS as the stock returned 63.9% so far in Q2 (through the end of May) 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.
Disclosure: None. This article was originally published at Insider Monkey.