Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published this article and predicted that US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 835 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Expedia Group, Inc. (NASDAQ:EXPE).
Expedia Group, Inc. (NASDAQ:EXPE) investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. EXPE was in 59 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 37 hedge funds in our database with EXPE positions at the end of the previous quarter. Our calculations also showed that EXPE isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to 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 more than 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Reeder of PAR Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Now let’s check out the key hedge fund action surrounding Expedia Group, Inc. (NASDAQ:EXPE).
Hedge fund activity in Expedia Group, Inc. (NASDAQ:EXPE)
At Q4’s end, a total of 59 of the hedge funds tracked by Insider Monkey were long this stock, a change of 59% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EXPE over the last 18 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Expedia Group, Inc. (NASDAQ:EXPE) was held by PAR Capital Management, which reported holding $854.1 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $483.3 million position. Other investors bullish on the company included Altimeter Capital Management, Millennium Management, and Melvin Capital Management. In terms of the portfolio weights assigned to each position PAR Capital Management allocated the biggest weight to Expedia Group, Inc. (NASDAQ:EXPE), around 16.62% of its 13F portfolio. HG Vora Capital Management is also relatively very bullish on the stock, setting aside 12.68 percent of its 13F equity portfolio to EXPE.
Consequently, some big names have been driving this bullishness. Melvin Capital Management, managed by Gabriel Plotkin, created the biggest position in Expedia Group, Inc. (NASDAQ:EXPE). Melvin Capital Management had $162.2 million invested in the company at the end of the quarter. Parag Vora’s HG Vora Capital Management also initiated a $135.2 million position during the quarter. The following funds were also among the new EXPE investors: Anand Parekh’s Alyeska Investment Group, Steve Cohen’s Point72 Asset Management, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now review hedge fund activity in other stocks similar to Expedia Group, Inc. (NASDAQ:EXPE). We will take a look at Seagate Technology plc (NASDAQ:STX), Loews Corporation (NYSE:L), Huntington Bancshares Incorporated (NASDAQ:HBAN), and Cheniere Energy, Inc. (NYSE:LNG). This group of stocks’ market caps resemble EXPE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STX | 35 | 2826852 | 5 |
| L | 24 | 213525 | -6 |
| HBAN | 25 | 44928 | 3 |
| LNG | 43 | 3483314 | 0 |
| Average | 31.75 | 1642155 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.75 hedge funds with bullish positions and the average amount invested in these stocks was $1642 million. That figure was $3035 million in EXPE’s case. Cheniere Energy, Inc. (NYSE:LNG) is the most popular stock in this table. On the other hand Loews Corporation (NYSE:L) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Expedia Group, Inc. (NASDAQ:EXPE) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 12.9% in 2020 through March 9th and still beat the market by 1.9 percentage points. Unfortunately EXPE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EXPE were disappointed as the stock returned -20.2% during the first two months of 2020 (through March 9th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.
