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Royal Caribbean Cruises Ltd. (RCL) Fell Out Of Favor With Hedge Funds

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We at Insider Monkey have gone over 867 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of Royal Caribbean Cruises Ltd. (NYSE:RCL) based on that data.

Royal Caribbean Cruises Ltd. (NYSE:RCL) was in 35 hedge funds' portfolios at the end of September. The all time high for this statistic is 52. RCL shareholders have witnessed a decrease in support from the world's most elite money managers lately. There were 42 hedge funds in our database with RCL holdings at the end of June. Our calculations also showed that RCL isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Michael Lowenstein Kensico Capital
Michael Lowenstein Kensico Capital

Michael Lowenstein of Kensico Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let's take a look at the new hedge fund action surrounding Royal Caribbean Cruises Ltd. (NYSE:RCL).

Do Hedge Funds Think RCL Is A Good Stock To Buy Now?

At the end of September, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in RCL over the last 25 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is RCL A Good Stock To Buy?
Is RCL A Good Stock To Buy?

More specifically, Citadel Investment Group was the largest shareholder of Royal Caribbean Cruises Ltd. (NYSE:RCL), with a stake worth $301 million reported as of the end of September. Trailing Citadel Investment Group was Citadel Investment Group, which amassed a stake valued at $92.4 million. Candlestick Capital Management, Columbus Hill Capital Management, and Candlestick Capital Management 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 Columbus Hill Capital Management allocated the biggest weight to Royal Caribbean Cruises Ltd. (NYSE:RCL), around 5.23% of its 13F portfolio. Proem Advisors is also relatively very bullish on the stock, designating 3.01 percent of its 13F equity portfolio to RCL.

Because Royal Caribbean Cruises Ltd. (NYSE:RCL) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there was a specific group of funds that decided to sell off their full holdings heading into Q4. It's worth mentioning that Stuart J. Zimmer's Zimmer Partners said goodbye to the largest investment of the "upper crust" of funds tracked by Insider Monkey, worth about $48 million in stock. Brett Barakett's fund, Tremblant Capital, also sold off its stock, about $40.5 million worth. These moves are interesting, as aggregate hedge fund interest fell by 7 funds heading into Q4.

Let's go over hedge fund activity in other stocks similar to Royal Caribbean Cruises Ltd. (NYSE:RCL). We will take a look at Magna International Inc. (NYSE:MGA), CNH Industrial NV (NYSE:CNHI), Extra Space Storage, Inc. (NYSE:EXR), Northern Trust Corporation (NASDAQ:NTRS), XP Inc. (NASDAQ:XP), Vulcan Materials Company (NYSE:VMC), and Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). All of these stocks' market caps are closest to RCL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MGA,29,444703,-10 CNHI,25,909259,1 EXR,27,405036,6 NTRS,34,535076,2 XP,28,674196,3 VMC,43,1923351,0 ALNY,40,1030395,7 Average,32.3,846002,1.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $846 million. That figure was $575 million in RCL's case. Vulcan Materials Company (NYSE:VMC) is the most popular stock in this table. On the other hand CNH Industrial NV (NYSE:CNHI) is the least popular one with only 25 bullish hedge fund positions. Royal Caribbean Cruises Ltd. (NYSE:RCL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RCL is 46. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately RCL wasn't nearly as popular as these 5 stocks and hedge funds that were betting on RCL were disappointed as the stock returned -21.5% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.