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 have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Playa Hotels & Resorts N.V. (NASDAQ:PLYA) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Playa Hotels & Resorts N.V. (NASDAQ:PLYA) was in 15 hedge funds' portfolios at the end of the third quarter of 2018. PLYA investors should be aware of a decrease in hedge fund interest recently. There were 19 hedge funds in our database with PLYA positions at the end of the previous quarter. As hedge funds dumped the stock, it's not surprising PLYA was not one of the 30 most popular stocks among hedge funds.
If you'd ask most shareholders, hedge funds are perceived as worthless, outdated financial tools of yesteryear. While there are more than 8000 funds in operation today, Our researchers choose to focus on the top tier of this group, about 700 funds. These hedge fund managers handle most of the smart money's total capital, and by observing their top stock picks, Insider Monkey has determined various investment strategies that have historically beaten the S&P 500 index. Insider Monkey's flagship hedge fund strategy surpassed the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 26.1% since February 2017 even though the market was up nearly 19% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
While collecting data on the company, we came across a letter from Dane Capital Management Fund, detailing its returns from the 4th quarter of 2017. Dane Capital has a position in the company. Here is what the fund had to say in the report:
"We’ve owned both Playa common and warrants and sold much of our position near its highs. That said, we still believe they have an exceptional management team and believe the longer-term roll-up story. When shares broke below $10 we added to our position. We also owned warrants at $0.60, which were exchanged to stock for the equivalent of $1.01 (or $10.10 for 10 warrant – at the time they were at $0.78). In aggregate, we made over 50% on our position in 2017. We maintain a small position and are looking to be opportunistic to add to our position since we believe the long-term story is intact. Although we were troubled by the Jamaica resort running behind plan (we believe they will successfully address the issues), and at the end of the day, we like low multiple stocks. We see a strong long-term growth runway for Playa."
We're going to take a gander at the recent hedge fund action regarding Playa Hotels & Resorts N.V. (NASDAQ:PLYA).
How have hedgies been trading Playa Hotels & Resorts N.V. (NASDAQ:PLYA)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PLYA over the last 13 quarters. With hedge funds' capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Farallon Capital was the largest shareholder of Playa Hotels & Resorts N.V. (NASDAQ:PLYA), with a stake worth $294.7 million reported as of the end of September. Trailing Farallon Capital was Empyrean Capital Partners, which amassed a stake valued at $42.1 million. Governors Lane, Armistice Capital, and Marlowe Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Since Playa Hotels & Resorts N.V. (NASDAQ:PLYA) has witnessed falling interest from the smart money, it's safe to say that there exists a select few funds that slashed their entire stakes last quarter. Interestingly, Anand Parekh's Alyeska Investment Group dumped the biggest stake of the "upper crust" of funds monitored by Insider Monkey, totaling about $9.5 million in stock. Brad Dunkley and Blair Levinsky's fund, Waratah Capital Advisors, also sold off its stock, about $0.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Playa Hotels & Resorts N.V. (NASDAQ:PLYA) but similarly valued. We will take a look at Saul Centers Inc (NYSE:BFS), Select Energy Services, Inc. (NYSE:WTTR), SJW Group (NYSE:SJW), and Tailored Brands, Inc. (NYSE:TLRD). All of these stocks' market caps resemble PLYA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BFS,7,26248,1 WTTR,14,104007,3 SJW,11,78625,-1 TLRD,23,103039,-1 [/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 $78 million. That figure was $486 million in PLYA's case. Tailored Brands, Inc. (NYSE:TLRD) is the most popular stock in this table. On the other hand Saul Centers Inc (NYSE:BFS) is the least popular one with only 7 bullish hedge fund positions. Playa Hotels & Resorts N.V. (NASDAQ:PLYA) 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. In this regard TLRD might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.