How do we determine whether Hyatt Hotels Corporation (NYSE:H) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Hyatt Hotels Corporation (NYSE:H) a buy, sell, or hold? Hedge funds are in an optimistic mood. The number of bullish hedge fund positions inched up by 5 in recent months. Our calculations also showed that H isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). H was in 28 hedge funds' portfolios at the end of September. There were 23 hedge funds in our database with H holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_670980" align="aligncenter" width="600"] Gabriel Plotkin of Melvin Capital Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a look at the new hedge fund action regarding Hyatt Hotels Corporation (NYSE:H).
How have hedgies been trading Hyatt Hotels Corporation (NYSE:H)?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. By comparison, 31 hedge funds held shares or bullish call options in H a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Select Equity Group held the most valuable stake in Hyatt Hotels Corporation (NYSE:H), which was worth $372.3 million at the end of the third quarter. On the second spot was Long Pond Capital which amassed $218.9 million worth of shares. Melvin Capital Management, D E Shaw, and Echo Street Capital Management 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 Long Pond Capital allocated the biggest weight to Hyatt Hotels Corporation (NYSE:H), around 5.71% of its portfolio. Wexford Capital is also relatively very bullish on the stock, designating 3.15 percent of its 13F equity portfolio to H.
Consequently, some big names were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, created the biggest position in Hyatt Hotels Corporation (NYSE:H). Citadel Investment Group had $5.7 million invested in the company at the end of the quarter. Lee Ainslie's Maverick Capital also initiated a $3.1 million position during the quarter. The other funds with brand new H positions are Mike Vranos's Ellington, Bruce Kovner's Caxton Associates, and Renee Yao's Neo Ivy Capital.
Let's now take a look at hedge fund activity in other stocks similar to Hyatt Hotels Corporation (NYSE:H). These stocks are Fortune Brands Home & Security Inc (NYSE:FBHS), AMERCO (NASDAQ:UHAL), Bausch Health Companies Inc. (NYSE:BHC), and Voya Financial Inc (NYSE:VOYA). All of these stocks' market caps are closest to H's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FBHS,33,555866,2 UHAL,10,400813,-5 BHC,32,1808152,1 VOYA,37,1076870,-6 Average,28,960425,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $960 million. That figure was $932 million in H's case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand AMERCO (NASDAQ:UHAL) is the least popular one with only 10 bullish hedge fund positions. Hyatt Hotels Corporation (NYSE:H) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on H, though not to the same extent, as the stock returned 9.9% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.