News and Views

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Hilton Worldwide Holdings Inc. (HLT) stock has suffered starting in March and April due to the coronavirus pandemic. Still, Hilton was added to the WhaleWisdom Index on August 17, 2020, despite the stock falling roughly 21.2% on the year. It is a steep loss for the shares, while the S&P 500 has outperformed, gaining approximately 3.4%.

Hilton owns hotels, resorts, and timeshare properties throughout the world. The pandemic caused a downturn in travel and restrictions on group gatherings that greatly impacted Hilton’s business, from individual hotel and wedding venue bookings to corporate conferences. The pandemic has had a negative impact on Hilton’s financial performance and the hospitality industry as a whole.

Hedge Funds Are Buying

Hedge funds were active in the second quarter, and the aggregate 13F shares held rose to about 93.9 million from 90.6 million, an increase of approximately 3.6%. Reviewing hedge fund activity, 40 created new positions, 39 added to existing holdings, 29 exited, and 32 reduced their stakes. In slight contrast to hedge funds, institutions were selling. Overall, institutions decreased their aggregate holdings by about 0.6%, to approximately 273.8 million from 275.6 million.

(WhaleWisdom)

Encouraging Estimates Beyond 2020

Analysts estimate that Hilton’s revenue will plunge in 2020 by approximately 48%. Fortunately, revenue is forecast to rebound in 2021 by 55.8% to $7.66 billion and an additional 19.9% in 2022. Meanwhile, earnings are forecast to drop 92% in 2020 to $0.32 per share and then jump to $2.36 in 2021 and $3.58 in 2022.

Optimistic Forecasts

Analysts like UBS Investment Bank are optimistic about the stock, keeping a Buy rating and giving Hilton a price target of $104. Additionally, PIMCO Investment Management’s chief investment officer (CIO) also has a positive attitude towards companies like Hilton, as they believe the travel and tourism sector will ride out the pandemic.

Hope for Hilton

Hilton’s long-term earnings growth and future estimates are encouraging for investors, with optimistic analysts anticipating a rebound from the pandemic within two to three years. While this does not eliminate the uncertainty of the pandemic’s end and the dark cloud it created over the hospitality industry, there’s hope for this hospitality giant after a rough start to the year.

If the industry can recover as many analysts expect, then hedge funds may find themselves on the winning side of this trade.

Adobe’s Strong Growth Sends the Shares Soaring

Posted on September 7th, 2020

Adobe Systems Inc.’s (ADBE) stock has steadily advanced over the past five months, with the shares rising by about 50% since the start of 2020, outperforming the S&P 500’s gain of approximately 6.9%.

Adobe is a multinational computer software company offering a variety of multimedia and creativity software products, with revenue segments including digital media, digital experience, and legacy publishing products.

Adobe appears to have been minimally affected by the coronavirus pandemic, while many other companies and industries have seen a negative impact. More recently, investors have noted that Adobe is benefitting from the shift to telecommuting, as there has been a higher demand for digital products such as Document Cloud, which includes Acrobat PDF, Scan, and Sign products.

WhaleWisdom Results

Adobe was added to the WhaleWisdom WhaleIndex 100 on August 16, 2020. However, despite Adobe’s improved performance in 2020 to date, hedge funds and institutions overall were selling the stock in the second quarter, causing Adobe to slip on the WhaleWisdom Heat Map to a ranking of 36 from a previous ranking of 18. Adobe saw its stock value increase as businesses have been driven by the pandemic to increase remote work and collaboration dramatically.

(WhaleWisdom)

Uninspired Hedge Funds Despite Earnings

Adobe has more recently left hedge fund managers and institutions feeling lukewarm. Looking at activity by the top hedge funds in the second quarter, the aggregate holdings decreased to about 84.7 million from 90.5 million, a mild decrease of approximately 6.4%. Of the hedge funds, 51 created new positions, 123 added to an existing one, 46 exited, and 134 reduced their holdings. Institutions were also selling, lowering 13F shares to 400.7 million from 406.3 million, a decrease of about 1.4%.

(WhaleWisdom)

Encouraging Multi-year Growth

Analysts have optimistic revenue and earnings estimates for the next several years, with expectations that earnings will rise year-over-year from 2020 through to 2023. Increases range from approximately 14.1% in 2020 to 7.3% in 2023. These significant year-over-year growth estimates would bring earnings to $12.98 per share in 2023, up from $9.73 for 2020. Additionally, revenue is forecast to climb as well, rising to $18.2 billion by the year 2023 from estimates of around $12.8 billion in 2020.

Positive Overall Outlook

Adobe’s steady growth and future estimates are encouraging for investors. While Adobe continues to face its fair share of competition from other software and digital marketing companies, the digital media leader continues to see increased pandemic related demand for its products. That should help to drive the stock higher for some time to come.

Zoom’s Stock Soars as Hedge Funds Move-In

Posted on August 31st, 2020

Zoom Video Communications, Inc. (ZM) has experienced soaring growth over the past seven months, dramatically outperforming the S&P 500, leaving it in its dust. The communications technology company moved up on the WhaleWisdom Heatmap to an impressive ranking of three in the second quarter. Hedge funds and institutions have been actively buying Zoom in 2020, resulting in a gain of approximately 339%, compared to the S&P’s increase of about 7.9%.

(WhaleWisdom)

Consumer demand for Zoom’s cloud-based software platform and online communication tools has increased dramatically due to the coronavirus pandemic, and the need for telecommuting and online education. Families, groups of friends, and social clubs have been turning to communication tools such as Zoom to create real-time connections while social distancing. While many companies have been negatively impacted by the pandemic, for Zoom, there have been lucrative opportunities for a new and expanded customer base.

Zoom Takes Center Stage

Zoom has the attention of hedge fund managers and institutions. Looking at activity by the top hedge funds in the second quarter, the aggregate 13F shares held increased to about 35.7 million from 26.9 million, an increase of approximately 32.3%. Of the hedge funds, 60 created new positions, 34 added to existing holdings, 23 exited, and 33 reduced their stakes. Institutions were also buying, with aggregate holdings increasing by about 30.5% to approximately 107.1 million from 82 million.

(WhaleWisdom)

Revenue on the Rise

Analysts see immense growth for the company, with earnings estimated to climb to $1.57 per share in 2022, up from $0.35 for 2020. Revenue is predicted to reach approximately $2.8 billion in 2022, up from estimates of $622.7 million in 2020.

Favorable Forecasts

Analysts are optimistic about Zoom overall. KeyBanc Capital Markets, Inc.’s analyst, Alex Kurtz, has a favorable outlook for Zoom’s stock, likely recognizing that the demand for collaboration and chat services will continue to be high as the world’s efforts to distance continue during the pandemic, and potentially beyond. Kurtz notes, that while many new Zoom accounts were opened in the summer, some decline is likely to be seen at this stage of the pandemic. Kurtz maintains a Sector Weight rating on the shares. RBC Capital Markets’ analyst, Alex Zukin, raised the stock’s price target to $300 from $250, maintaining an Outperform rating and citing that monthly active users and App downloads are well above historical averages.

Positive Outlook

Zoom’s impressive growth and future estimates are encouraging for investors. While Zoom continues to face its fair share of competition from other tech companies, and growth may not be able to continue at the current rate, Zoom has undoubtedly benefited from the pandemic, becoming a household name. That brand recognition can go a long way, and the circumstances of the pandemic have influenced consumer practices to include Zoom in their work, learning, and day-to-day personal lives.

Apple’s Historic Rise

Posted on August 24th, 2020

Apple, Inc.’s (AAPL) stock saw substantial growth over the past few months following a brief decline in March when the market, in general, was negatively impacted by the coronavirus pandemic. The multinational technology company moved up on the WhaleWisdom Heatmap to an inspiring ranking of four. Hedge funds were actively buying Apple in the second quarter, as it has consistently outperformed the S&P 500’s performance this year, rising by approximately 69.4% in comparison to the S&P’s gain of about 5.2%.

While Apple initially felt the sting of the economic shutdown in the spring, the negative impact of the pandemic appears to be short-lived, with consumers still quite interested in Apple’s mobile devices, computers, software, and services. It’s likely that even though some consumers may have smaller budgets at this time, Apple has seen positive spending by those influenced by the pandemic’s strong push toward telecommuting, online learning, and keeping home-bound children entertained.

(WhaleWisdom)

Mixed Actions from Hedge Funds and Institutions

Looking at second-quarter activity by the top hedge funds, Apple saw an increase in its aggregate shares held. Total 13F shares held rose to about 352.8 million from 352.4 million, an increase of approximately 0.1%. Of the hedge funds, 49 created new positions, 161 added to existing ones, 29 closed out their holdings, and 278 reduced their stakes. In slight contrast to hedge funds, institutions were selling. Overall, institutions decreased their aggregate holdings by about 7.6%, to approximately 2.6 billion from 2.8 billion.

Impressive Multi-Year Estimates

Analysts anticipate that earnings per share will continue to rise from 2020 through 2022, with year over year growth ranging from about 6.6% to 19.4%. These significant year-over-year estimated increases would bring earnings to $16.45 per share in 2022, up from an estimate of $12.92 for 2020.

(WhaleWisdom)

Some Analysts Are Cautious Despite Stock Performance

Despite favorable estimates for the next few years and a market capitalization that has reached a landmark of $2 trillion, many analysts show a reasonably cautious view on Apple’s stock. Bank of America Co.’s analyst, Wamsi Mohan, noted revenue deceleration in China and maintained a price target of $470 with a neutral rating on the shares. Bernstein Investment Research’s analyst, Toni Sacconaghi, believes that Apple is underspending on research and development in comparison to its peers. However, Wedbush Capital’s analyst, Daniel Ives, pointed out that while the pandemic continues to weigh on near-term consumer trends, opportunity lies ahead for Apple as many consumers are eligible to upgrade their mobile phones to the iPhone 12. Ives maintains an Outperform rating on the shares with a price target of $515.

Positive Outlook

Apple has demonstrated impressive upward momentum at a time when so many other businesses have had growth negatively stunted by the pandemic. While investors should apply caution in decision making, there is a good possibility that the pandemic will continue to be a strong motivator for many consumers to spend on Apple’s products. Growth estimates for Apple offer an additional sign of confidence for future performance for this tech company.

Visa Navigates Pandemic’s Bumpy Ride

Posted on August 17th, 2020

Visa Inc. (V) stock has jumped over the past four months following a brief decline in late February and early March 2020, as part of a broader market drawdown due to the coronavirus pandemic. Despite the pullback, the payment application company has moved up on the WhaleWisdom Heatmap to a ranking of twelve. Hedge funds were actively buying Visa in the first quarter. The stock has closely followed the S&P 500’s performance, rising by approximately 4.4% in comparison to the S&P’s gain of about 4.65%.

Visa is more than just a credit card company and has an intense but complex business model, including a portfolio of payment brands, branded payment product platforms, transaction processing, and debit processing services. Business transactions greatly influence Visa’s performance and individual consumer spending, which understandably were negatively impacted by the pandemic-induced shutdown of businesses, halted travel, and local government stay-at-home orders. While consumers are beginning to again spend on discretionary items, there is new caution as unemployment rates are up, and the pandemic has influenced consumer mindsets to focus more on essential items. Between temporary forced business closures, restricted business re-openings, and changing consumer habits, it has been a bumpy road for companies like Visa to forge ahead.

Varied Results from Hedge Funds and Institutions

Looking at the first quarter activity among hedge funds, Visa saw an increase in its aggregate share value. Total 13F shares held rose to about 583.6 million from 569 million, an increase of approximately 2.6%. Of the hedge funds, 54 created new positions, 169 added to existing holdings, 46 exited, and 212 reduced their stakes. In slight contrast to hedge funds, institutions were selling. Overall, institutions decreased their aggregate holdings by about 2%, to approximately 1.58 billion from 1.61 billion.

(WhaleWisdom Heatmap)

Encouraging Multi-year Estimates

Analysts anticipate that earnings per share will initially fall in the fiscal year ending September 2020, but then predict a rise in 2021 and 2022 of approximately 16.5% and 19.8%, respectively. These significant year-over-year estimated increases would bring earnings to $7 per share in 2022, up from $5.02 for 2020.

Additionally, KeyBanc Capital Markets Inc.’s analyst, Josh Beck, has a favorable outlook for the stock and raised the price target to $215 from $190, while maintaining an Overweight rating on shares.

(WhaleWisdom)

Long-term Optimism

Things are certainly looking up for Visa, and analysts’ multi-year predictions are encouraging. However, while Visa ultimately saw a rebound this year from reduced earnings near the start of the pandemic, the uncertainty as to when the pandemic will end is still a concerning factor. Investors may need patience to see higher stock prices.