The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Despegar.com, Corp. (NYSE:DESP) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Despegar.com, Corp. (NYSE:DESP) investors should be aware of an increase in hedge fund sentiment in recent months. Despegar.com, Corp. (NYSE:DESP) was in 18 hedge funds’ portfolios at the end of June. The all time high for this statistics is 20. There were 16 hedge funds in our database with DESP positions at the end of the first quarter. Our calculations also showed that DESP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Chase Coleman of Tiger Global
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 to get excerpts of these letters in your inbox. Now we’re going to take a glance at the recent hedge fund action surrounding Despegar.com, Corp. (NYSE:DESP).
How have hedgies been trading Despegar.com, Corp. (NYSE:DESP)?
At Q2’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DESP over the last 20 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Tiger Global Management LLC held the most valuable stake in Despegar.com, Corp. (NYSE:DESP), which was worth $66.5 million at the end of the third quarter. On the second spot was Ancient Art (Teton Capital) which amassed $15 million worth of shares. Two Creeks Capital Management, Bares Capital Management, and Sylebra Capital Management 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 Ancient Art (Teton Capital) allocated the biggest weight to Despegar.com, Corp. (NYSE:DESP), around 2.76% of its 13F portfolio. Moerus Capital Management is also relatively very bullish on the stock, designating 0.75 percent of its 13F equity portfolio to DESP.
Consequently, some big names were leading the bulls’ herd. Sylebra Capital Management, managed by Daniel Patrick Gibson, established the largest position in Despegar.com, Corp. (NYSE:DESP). Sylebra Capital Management had $4 million invested in the company at the end of the quarter. Ravee Mehta’s Nishkama Capital also made a $0.9 million investment in the stock during the quarter. The other funds with brand new DESP positions are Brian Gaines’s Springhouse Capital Management, Michael Gelband’s ExodusPoint Capital, and Steve Cohen’s Point72 Asset Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Despegar.com, Corp. (NYSE:DESP) but similarly valued. These stocks are The Chefs Warehouse, Inc (NASDAQ:CHEF), Conduent Incorporated (NASDAQ:CNDT), HarborOne Bancorp, Inc. (NASDAQ:HONE), TORM plc (NASDAQ:TRMD), Bank First Corporation (NASDAQ:BFC), Consolidated Communications Holdings Inc (NASDAQ:CNSL), and Mirum Pharmaceuticals, Inc. (NASDAQ:MIRM). This group of stocks’ market caps are closest to DESP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHEF | 14 | 79114 | 3 |
| CNDT | 21 | 149507 | 3 |
| HONE | 13 | 29714 | 1 |
| TRMD | 3 | 356052 | -1 |
| BFC | 2 | 1126 | 0 |
| CNSL | 12 | 26859 | -3 |
| MIRM | 13 | 180396 | 5 |
| Average | 11.1 | 117538 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.1 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $109 million in DESP’s case. Conduent Incorporated (NASDAQ:CNDT) is the most popular stock in this table. On the other hand Bank First Corporation (NASDAQ:BFC) is the least popular one with only 2 bullish hedge fund positions. Despegar.com, Corp. (NYSE:DESP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DESP is 76.1. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately DESP wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on DESP were disappointed as the stock returned -11.4% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
