Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Park Hotels & Resorts Inc. (NYSE:PK) in this article.
Park Hotels & Resorts Inc. (NYSE:PK) has experienced an increase in enthusiasm from smart money of late. PK was in 25 hedge funds' portfolios at the end of the second quarter of 2019. There were 14 hedge funds in our database with PK positions at the end of the previous quarter. Our calculations also showed that PK isn't among the 30 most popular stocks among hedge funds.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely 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. Let's take a gander at the fresh hedge fund action encompassing Park Hotels & Resorts Inc. (NYSE:PK).
How have hedgies been trading Park Hotels & Resorts Inc. (NYSE:PK)?
At the end of the second quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 79% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PK over the last 16 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Southeastern Asset Management, managed by Mason Hawkins, holds the most valuable position in Park Hotels & Resorts Inc. (NYSE:PK). Southeastern Asset Management has a $238 million position in the stock, comprising 3.9% of its 13F portfolio. On Southeastern Asset Management's heels is Renaissance Technologies which holds a $39.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism include Israel Englander's Millennium Management, Frederick DiSanto's Ancora Advisors and Dmitry Balyasny's Balyasny Asset Management.
Consequently, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most valuable position in Park Hotels & Resorts Inc. (NYSE:PK). Balyasny Asset Management had $15.3 million invested in the company at the end of the quarter. Greg Poole's Echo Street Capital Management also initiated a $3.1 million position during the quarter. The following funds were also among the new PK investors: Matthew Tewksbury's Stevens Capital Management, Louis Bacon's Moore Global Investments, and Mike Vranos's Ellington.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Park Hotels & Resorts Inc. (NYSE:PK) but similarly valued. These stocks are Grupo Financiero Galicia S.A. (NASDAQ:GGAL), Ingredion Incorporated (NYSE:INGR), Smartsheet Inc. (NYSE:SMAR), and The Scotts Miracle-Gro Company (NYSE:SMG). This group of stocks' market valuations are closest to PK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GGAL,12,109602,-5 INGR,21,255889,3 SMAR,46,1485379,16 SMG,24,322590,8 Average,25.75,543365,5.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $543 million. That figure was $374 million in PK's case. Smartsheet Inc. (NYSE:SMAR) is the most popular stock in this table. On the other hand Grupo Financiero Galicia S.A. (NASDAQ:GGAL) is the least popular one with only 12 bullish hedge fund positions. Park Hotels & Resorts Inc. (NYSE:PK) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 PK wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); PK investors were disappointed as the stock returned -7.7% 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 (view the video below) among hedge funds as many of these stocks already outperformed the market so far in 2019. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.