After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of June 28. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Hilton Worldwide Holdings Inc (NYSE:HLT).
Hilton Worldwide Holdings Inc (NYSE:HLT) has seen a decrease in enthusiasm from smart money in recent months. HLT was in 44 hedge funds' portfolios at the end of the second quarter of 2019. There were 51 hedge funds in our database with HLT holdings at the end of the previous quarter. Our calculations also showed that HLT isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to 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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to view the latest hedge fund action encompassing Hilton Worldwide Holdings Inc (NYSE:HLT).
How are hedge funds trading Hilton Worldwide Holdings Inc (NYSE:HLT)?
At the end of the second quarter, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HLT over the last 16 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Pershing Square held the most valuable stake in Hilton Worldwide Holdings Inc (NYSE:HLT), which was worth $1071.8 million at the end of the second quarter. On the second spot was D1 Capital Partners which amassed $502.9 million worth of shares. Moreover, Eagle Capital Management, Soroban Capital Partners, and OZ Management were also bullish on Hilton Worldwide Holdings Inc (NYSE:HLT), allocating a large percentage of their portfolios to this stock.
Because Hilton Worldwide Holdings Inc (NYSE:HLT) has faced a decline in interest from hedge fund managers, we can see that there exists a select few money managers that slashed their entire stakes last quarter. It's worth mentioning that Jonathan Auerbach's Hound Partners cut the biggest investment of all the hedgies monitored by Insider Monkey, worth an estimated $72.3 million in stock, and Mitch Kuflik and Rob Sobel's Brahman Capital was right behind this move, as the fund dropped about $66.1 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 7 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Hilton Worldwide Holdings Inc (NYSE:HLT). These stocks are JD.Com Inc (NASDAQ:JD), Consolidated Edison, Inc. (NYSE:ED), Equity Residential (NYSE:EQR), and AvalonBay Communities Inc (NYSE:AVB). All of these stocks' market caps are closest to HLT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JD,45,5156730,-3 ED,26,1401907,3 EQR,23,223216,1 AVB,21,662423,-5 Average,28.75,1861069,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $1861 million. That figure was $4372 million in HLT's case. JD.Com Inc (NASDAQ:JD) is the most popular stock in this table. On the other hand AvalonBay Communities Inc (NYSE:AVB) is the least popular one with only 21 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately HLT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on HLT were disappointed as the stock returned -4.6% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.