Is Park Hotels & Resorts Inc. (NYSE:PK) 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.
Park Hotels & Resorts Inc. (NYSE:PK) has seen a decrease in enthusiasm from smart money in recent months. 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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a look at the recent hedge fund action surrounding Park Hotels & Resorts Inc. (NYSE:PK).
How have hedgies been trading Park Hotels & Resorts Inc. (NYSE:PK)?
At Q1's end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PK over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Park Hotels & Resorts Inc. (NYSE:PK) was held by Southeastern Asset Management, which reported holding $383.8 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $26.6 million position. Other investors bullish on the company included Millennium Management, Ancora Advisors, and Two Sigma Advisors.
Because Park Hotels & Resorts Inc. (NYSE:PK) has faced a decline in interest from the entirety of the hedge funds we track, it's safe to say that there were a few hedgies that slashed their entire stakes in the third quarter. At the top of the heap, Steve Cohen's Point72 Asset Management cut the biggest stake of the "upper crust" of funds watched by Insider Monkey, worth about $11.2 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also cut its stock, about $8.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds in the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Park Hotels & Resorts Inc. (NYSE:PK) but similarly valued. We will take a look at Starwood Property Trust, Inc. (NYSE:STWD), New Residential Investment Corp (NYSE:NRZ), EnLink Midstream LLC (NYSE:ENLC), and Carlyle Group LP (NASDAQ:CG). This group of stocks' market valuations match PK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STWD,15,144343,-2 NRZ,18,187262,-7 ENLC,10,39338,-5 CG,7,122872,-3 Average,12.5,123454,-4.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $123 million. That figure was $503 million in PK's case. New Residential Investment Corp (NYSE:NRZ) is the most popular stock in this table. On the other hand Carlyle Group LP (NASDAQ:CG) is the least popular one with only 7 bullish hedge fund positions. Park Hotels & Resorts Inc. (NYSE:PK) 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately PK wasn't nearly as popular as these 20 stocks and hedge funds that were betting on PK were disappointed as the stock returned -8.8% during the same period 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 among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.