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Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Wyndham Destinations, Inc. (NYSE:WYND).
Is WYND stock a buy? Wyndham Destinations, Inc. (NYSE:WYND) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 29 hedge funds' portfolios at the end of December. Our calculations also showed that WYND isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Velodyne Lidar, Inc. (NASDAQ:VLDR), Safehold Inc. (NYSE:SAFE), and Companhia Brasileira de Distribuição (NYSE:CBD) to gather more data points.
To the average investor there are a large number of gauges market participants can use to value their holdings. Two of the most useful gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can outpace the S&P 500 by a significant amount (see the details here).
Harold Levy of Iridian Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we're going to take a gander at the fresh hedge fund action surrounding Wyndham Destinations, Inc. (NYSE:WYND).
Do Hedge Funds Think WYND Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WYND over the last 22 quarters. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, David Cohen and Harold Levy's Iridian Asset Management has the number one position in Wyndham Destinations, Inc. (NYSE:WYND), worth close to $205.2 million, accounting for 3.7% of its total 13F portfolio. The second most bullish fund manager is Richard Mashaal of Rima Senvest Management, with a $99.6 million position; 3.9% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions comprise Wilmot B. Harkey and Daniel Mack's Nantahala Capital Management, D. E. Shaw's D E Shaw and Craig Peskin and Peter Fleiss's Solel Partners. In terms of the portfolio weights assigned to each position Solel Partners allocated the biggest weight to Wyndham Destinations, Inc. (NYSE:WYND), around 8.88% of its 13F portfolio. Strycker View Capital is also relatively very bullish on the stock, designating 6.95 percent of its 13F equity portfolio to WYND.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's go over hedge fund activity in other stocks similar to Wyndham Destinations, Inc. (NYSE:WYND). These stocks are Velodyne Lidar, Inc. (NASDAQ:VLDR), Safehold Inc. (NYSE:SAFE), Companhia Brasileira de Distribuição (NYSE:CBD), SPS Commerce, Inc. (NASDAQ:SPSC), Portland General Electric Company (NYSE:POR), Cimarex Energy Co (NYSE:XEC), and Murphy USA Inc. (NYSE:MUSA). This group of stocks' market values resemble WYND's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VLDR,16,94202,3 SAFE,9,7069,2 CBD,6,19423,-1 SPSC,14,155281,0 POR,19,105607,-5 XEC,34,510402,-4 MUSA,26,290376,3 Average,17.7,168909,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $169 million. That figure was $589 million in WYND's case. Cimarex Energy Co (NYSE:XEC) is the most popular stock in this table. On the other hand Companhia Brasileira de Distribuição (NYSE:CBD) is the least popular one with only 6 bullish hedge fund positions. Wyndham Destinations, Inc. (NYSE:WYND) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WYND is 71.7. 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 WYND as the stock returned 44.2% 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.