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In this article we will analyze whether Hilton Grand Vacations Inc. (NYSE:HGV) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is HGV stock a buy? Hilton Grand Vacations Inc. (NYSE:HGV) investors should pay attention to a decrease in hedge fund interest lately. Hilton Grand Vacations Inc. (NYSE:HGV) was in 31 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 46. Our calculations also showed that HGV isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
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Do Hedge Funds Think HGV Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the third quarter of 2020. By comparison, 46 hedge funds held shares or bullish call options in HGV a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, North Peak Capital held the most valuable stake in Hilton Grand Vacations Inc. (NYSE:HGV), which was worth $151.7 million at the end of the fourth quarter. On the second spot was Parsifal Capital Management which amassed $93.6 million worth of shares. Rima Senvest Management, P2 Capital Partners, and Long Pond Capital 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 North Peak Capital allocated the biggest weight to Hilton Grand Vacations Inc. (NYSE:HGV), around 27.14% of its 13F portfolio. Parsifal Capital Management is also relatively very bullish on the stock, dishing out 11.67 percent of its 13F equity portfolio to HGV.
Because Hilton Grand Vacations Inc. (NYSE:HGV) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there were a few money managers who sold off their entire stakes by the end of the fourth quarter. It's worth mentioning that Paul Marshall and Ian Wace's Marshall Wace LLP sold off the biggest investment of the 750 funds watched by Insider Monkey, totaling close to $7.9 million in stock, and Chuck Royce's Royce & Associates was right behind this move, as the fund dumped about $2.6 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds by the end of the fourth quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Hilton Grand Vacations Inc. (NYSE:HGV) but similarly valued. These stocks are Atlas Corp. (NYSE:ATCO), Commscope Holding Company Inc (NASDAQ:COMM), Utz Brands Inc (NYSE:UTZ), LGI Homes Inc (NASDAQ:LGIH), Arcosa, Inc. (NYSE:ACA), Opko Health Inc. (NASDAQ:OPK), and Ameris Bancorp (NASDAQ:ABCB). All of these stocks' market caps resemble HGV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATCO,18,1134798,8 COMM,35,643538,5 UTZ,15,101186,0 LGIH,23,90560,-2 ACA,17,216350,-2 OPK,16,20591,5 ABCB,18,99769,5 Average,20.3,329542,2.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.3 hedge funds with bullish positions and the average amount invested in these stocks was $330 million. That figure was $760 million in HGV's case. Commscope Holding Company Inc (NASDAQ:COMM) is the most popular stock in this table. On the other hand Utz Brands Inc (NYSE:UTZ) is the least popular one with only 15 bullish hedge fund positions. Hilton Grand Vacations Inc. (NYSE:HGV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HGV is 64.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on HGV as the stock returned 21.8% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.