Did Hedge Funds Make The Right Call On Wyndham Destinations, Inc. (WYND) ?
Debasis Saha
6 min read
Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Wyndham Destinations, Inc. (NYSE:WYND) based on that data and determine whether they were really smart about the stock.
Is Wyndham Destinations, Inc. (NYSE:WYND) a sound investment now? Money managers were turning less bullish. The number of long hedge fund positions fell by 3 recently. Our calculations also showed that WYND isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). WYND was in 25 hedge funds' portfolios at the end of March. There were 28 hedge funds in our database with WYND positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Now we're going to take a gander at the recent hedge fund action surrounding Wyndham Destinations, Inc. (NYSE:WYND).
How have hedgies been trading Wyndham Destinations, Inc. (NYSE:WYND)?
At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WYND over the last 18 quarters. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Is WYND A Good Stock To Buy?
Among these funds, Iridian Asset Management held the most valuable stake in Wyndham Destinations, Inc. (NYSE:WYND), which was worth $93 million at the end of the third quarter. On the second spot was Rima Senvest Management which amassed $26.9 million worth of shares. Arrowstreet Capital, Nantahala Capital Management, and Marshall Wace LLP 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 Rima Senvest Management allocated the biggest weight to Wyndham Destinations, Inc. (NYSE:WYND), around 3.15% of its 13F portfolio. Iridian Asset Management is also relatively very bullish on the stock, earmarking 2.25 percent of its 13F equity portfolio to WYND.
Seeing as Wyndham Destinations, Inc. (NYSE:WYND) has faced falling interest from the aggregate hedge fund industry, we can see that there is a sect of hedgies that decided to sell off their entire stakes last quarter. Interestingly, Stuart J. Zimmer's Zimmer Partners said goodbye to the biggest stake of the 750 funds tracked by Insider Monkey, worth close to $25 million in stock, and Mark Travis's Intrepid Capital Management was right behind this move, as the fund cut about $5.5 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Wyndham Destinations, Inc. (NYSE:WYND) but similarly valued. We will take a look at Fulton Financial Corp (NASDAQ:FULT), Eidos Therapeutics, Inc. (NASDAQ:EIDX), AMTD International Inc. (NYSE:HKIB), and CommVault Systems, Inc. (NASDAQ:CVLT). All of these stocks' market caps match WYND's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FULT,14,12965,0 EIDX,12,271572,-8 HKIB,1,15174,0 CVLT,18,463730,-15 Average,11.25,190860,-5.75 [/table]
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $191 million. That figure was $200 million in WYND's case. CommVault Systems, Inc. (NASDAQ:CVLT) is the most popular stock in this table. On the other hand AMTD International Inc. (NYSE:HKIB) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Wyndham Destinations, Inc. (NYSE:WYND) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on WYND as the stock returned 32% in Q2 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
