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 Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) based on that data.
Is Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) a buy here? Investors who are in the know are becoming less hopeful. The number of long hedge fund positions dropped by 18 in recent months. Our calculations also showed that NCLH 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). NCLH was in 20 hedge funds' portfolios at the end of the first quarter of 2020. There were 38 hedge funds in our database with NCLH holdings at the end of the previous quarter. 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_681361" align="aligncenter" width="400"] Glen Kacher of Light Street Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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. Keeping this in mind we're going to analyze the fresh hedge fund action regarding Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH).
How are hedge funds trading Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH)?
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -47% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NCLH over the last 18 quarters. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
Among these funds, Light Street Capital held the most valuable stake in Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), which was worth $31 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $23.1 million worth of shares. Platinum Asset Management, Renaissance Technologies, and Ariel Investments 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 Light Street Capital allocated the biggest weight to Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), around 1.63% of its 13F portfolio. Platinum Asset Management is also relatively very bullish on the stock, dishing out 0.42 percent of its 13F equity portfolio to NCLH.
Since Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) has witnessed declining sentiment from hedge fund managers, it's safe to say that there exists a select few funds that slashed their positions entirely by the end of the first quarter. At the top of the heap, Thomas E. Claugus's GMT Capital dumped the biggest investment of the 750 funds monitored by Insider Monkey, comprising about $64.3 million in stock, and Richard Merage's MIG Capital was right behind this move, as the fund dropped about $52.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 18 funds by the end of the first quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) but similarly valued. These stocks are Ternium S.A. (NYSE:TX), Colfax Corporation (NYSE:CFX), United Bankshares, Inc. (NASDAQ:UBSI), and Taro Pharmaceutical Industries Ltd. (NYSE:TARO). This group of stocks' market valuations match NCLH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TX,8,62086,-3 CFX,32,421377,-11 UBSI,13,46714,-5 TARO,9,64708,-3 Average,15.5,148721,-5.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $149 million. That figure was $114 million in NCLH's case. Colfax Corporation (NYSE:CFX) is the most popular stock in this table. On the other hand Ternium S.A. (NYSE:TX) is the least popular one with only 8 bullish hedge fund positions. Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) is not the most popular stock in this group but hedge fund interest is still above average. 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 12.2% in 2020 through June 17th but still beat the market by 14.8 percentage points. Hedge funds were also right about betting on NCLH as the stock returned 75.2% in Q2 (through June 17th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.