2. Airbnb, Inc. (NASDAQ: ABNB)
Number of Hedge Fund Holders: 52
Airbnb, Inc. (NASDAQ: ABNB) is a vacation rental firm based in California. It only made its stock market debut late last year and could not fully capitalize on the promise it offered to investors as the COVID-19 restrictions prevented the company from registering noticeable growth. However, as the economy reopens, the firm can expect record growth. It is placed second on our list of 10 stocks to buy to profit from post-COVID economic recovery. The company’s shares have returned over 3% to investors in the past twelve months.
On May 27, investment advisory RBC Capital Markets gave Airbnb, Inc. (NASDAQ: ABNB) stock an Outperform rating and named it as one of the best players amid the hot demand trend for travel in the post-COVID economy.
At the end of the first quarter of 2021, 52 hedge funds in the database of Insider Monkey held stakes worth $2.4 billion in Airbnb, Inc. (NASDAQ: ABNB), down from 68 in the preceding quarter worth $1.6 billion.
In its Q4 2020 investor letter, Blue Hawk Investment Group, an asset management firm, highlighted a few stocks and Airbnb, Inc. (NASDAQ: ABNB) was one of them. Here is what the fund said:
“We typically avoid new issues, with ABNB being a rare exception. ABNB fits right into our wheelhouse as a leader in a promising industry, with a disruptive business model, unique company culture, massive addressable market, and a name synonymous with a category (“got an Airbnb for the weekend”). Towards the end of the year, the narrative of the hot IPO/SPAC environment we found to be fitting, with exception. We believe grouping ABNB into this category is a mistake. The IPO was botched, but the mistake was the initial offering price being far too low in this case. We believe the reason for this initial mispricing was the proximity of the IPO to the vaccine effectiveness data release. The data turned out to be much better than anticipated, a blue-sky result, causing a drastic change in the outlook for travel and lodging, the industry in which ABNB operates. Bayes Theorem in action, people typically have a bias when incorporating new information, in that they do not adjust their view as quickly as they should, and the vaccine data release required an almost complete reversal of views.
Back to the company, we started buying on day one and continued to build a position into the $120s and $130s. A founder-led firm, we believe the company has an excellent management team, a very attractive growth profile with many levers at their disposal, and embedded optionality due to their attractive position in the travel ecosystem (and minimal reliance on Google). The most underappreciated aspect of the story is the attractiveness of the financial model. Not many IPOs come along that get us excited, but we believe the future is bright for this young company. We will reveal more details about our thesis in future letters.”
