Is Vail Resorts, Inc. (NYSE:MTN) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Vail Resorts, Inc. (NYSE:MTN) shareholders have witnessed a decrease in hedge fund interest of late. MTN was in 26 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 30 hedge funds in our database with MTN holdings at the end of the previous quarter. Our calculations also showed that MTN isn't among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let's analyze the latest hedge fund action regarding Vail Resorts, Inc. (NYSE:MTN).
What have hedge funds been doing with Vail Resorts, Inc. (NYSE:MTN)?
At the end of the fourth quarter, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. By comparison, 22 hedge funds held shares or bullish call options in MTN a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, John H. Scully's SPO Advisory Corp has the largest position in Vail Resorts, Inc. (NYSE:MTN), worth close to $203.2 million, amounting to 9.6% of its total 13F portfolio. On SPO Advisory Corp's heels is Ric Dillon of Diamond Hill Capital, with a $95.8 million position; 0.6% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish include Jim Simons's Renaissance Technologies, Pasco Alfaro / Richard Tumure's Miura Global Management and Gregory Thomas's Carbonado Capital.
Due to the fact that Vail Resorts, Inc. (NYSE:MTN) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there were a few hedgies that slashed their positions entirely by the end of the third quarter. At the top of the heap, Brian Gustavson and Andrew Haley's 1060 Capital Management cut the largest position of all the hedgies tracked by Insider Monkey, worth about $26.1 million in stock. Scott Phillips's fund, Latimer Light Capital, also dropped its stock, about $19.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks similar to Vail Resorts, Inc. (NYSE:MTN). We will take a look at Huazhu Group Limited (NASDAQ:HTHT), BeiGene, Ltd. (NASDAQ:BGNE), Ralph Lauren Corporation (NYSE:RL), and Jacobs Engineering Group Inc (NYSE:JEC). This group of stocks' market values are similar to MTN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HTHT,15,147112,1 BGNE,15,1967050,-8 RL,31,753923,3 JEC,33,879623,3 Average,23.5,936927,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $937 million. That figure was $545 million in MTN's case. Jacobs Engineering Group Inc (NYSE:JEC) is the most popular stock in this table. On the other hand Huazhu Group Limited (NASDAQ:HTHT) is the least popular one with only 15 bullish hedge fund positions. Vail Resorts, Inc. (NYSE:MTN) 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 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately MTN wasn't in this group. Hedge funds that bet on MTN were disappointed as the stock returned 1.6% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.