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Hedge Funds Are Coming Back To Hilton Worldwide Holdings Inc (HLT)

Abigail Fisher
·6 min read

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 at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Hilton Worldwide Holdings Inc (NYSE:HLT) and determine whether the smart money was really smart about this stock.

Hilton Worldwide Holdings Inc (NYSE:HLT) shareholders have witnessed an increase in support from the world's most elite money managers of late. Hilton Worldwide Holdings Inc (NYSE:HLT) was in 53 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 57. There were 43 hedge funds in our database with HLT holdings at the end of March. Our calculations also showed that HLT isn't among the 30 most popular stocks among hedge funds (click for Q2 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 21st century investor’s toolkit there are a multitude of gauges stock traders can use to appraise their stock investments. A couple of the most useful gauges are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top money managers can outclass their index-focused peers by a significant margin (see the details here).

Can hedge funds beat the market
Can hedge funds beat the market

Bill Ackman of Pershing Square

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let's take a look at the key hedge fund action surrounding Hilton Worldwide Holdings Inc (NYSE:HLT).

What does smart money think about Hilton Worldwide Holdings Inc (NYSE:HLT)?

At the end of June, a total of 53 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HLT over the last 20 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Among these funds, Pershing Square held the most valuable stake in Hilton Worldwide Holdings Inc (NYSE:HLT), which was worth $1012.8 million at the end of the third quarter. On the second spot was D1 Capital Partners which amassed $829 million worth of shares. Eagle Capital Management, Viking Global, and Long Pond Capital 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 Pelham Capital allocated the biggest weight to Hilton Worldwide Holdings Inc (NYSE:HLT), around 17.46% of its 13F portfolio. Pershing Square is also relatively very bullish on the stock, dishing out 13.06 percent of its 13F equity portfolio to HLT.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Viking Global, managed by Andreas Halvorsen, created the most valuable position in Hilton Worldwide Holdings Inc (NYSE:HLT). Viking Global had $534.2 million invested in the company at the end of the quarter. Eric W. Mandelblatt and Gaurav Kapadia's Soroban Capital Partners also initiated a $115.3 million position during the quarter. The other funds with brand new HLT positions are Gabriel Plotkin's Melvin Capital Management, Brian J. Higgins's King Street Capital, and Anand Desai's Darsana Capital Partners.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Hilton Worldwide Holdings Inc (NYSE:HLT) but similarly valued. We will take a look at Rogers Communications Inc. (NYSE:RCI), D.R. Horton, Inc. (NYSE:DHI), Southwest Airlines Co. (NYSE:LUV), Corteva, Inc. (NYSE:CTVA), Old Dominion Freight Line, Inc. (NASDAQ:ODFL), ZoomInfo Technologies Inc. (NASDAQ:ZI), and PPL Corporation (NYSE:PPL). This group of stocks' market valuations resemble HLT's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RCI,16,340545,0 DHI,66,2088308,1 LUV,56,873793,11 CTVA,39,775291,3 ODFL,35,480042,2 ZI,24,157040,24 PPL,25,159807,-3 Average,37.3,696404,5.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.3 hedge funds with bullish positions and the average amount invested in these stocks was $696 million. That figure was $4467 million in HLT's case. D.R. Horton, Inc. (NYSE:DHI) is the most popular stock in this table. On the other hand Rogers Communications Inc. (NYSE:RCI) is the least popular one with only 16 bullish hedge fund positions. Hilton Worldwide Holdings Inc (NYSE:HLT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HLT is 74.9. 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 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 gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Hedge funds were also right about betting on HLT as the stock returned 23% since Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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