There is a wide range of stock selection methods retail investors can use to select good stocks, or at least avoid bad stocks. Highly-scrutinized television personality Jim Cramer recommends investors look at the new-high list, which includes stocks that reach their highest price in the past 52 weeks. This stock selection method seems to be quite good, considering that stocks included in that list are there for good reason. Nonetheless, this strategy is more appropriate for short term-oriented investors. There is a different approach that allows long-term-oriented investors to find high-potential stocks. This method involves looking at the basket of stocks that attracts the most attention from top hedge fund vehicles. These stocks receive attention from the hedge fund industry for good reason, and historical data shows that it pays off to closely examine this group of stocks (see more details here). Ctrip.com International Ltd. (ADR) (NASDAQ:CTRP) is one of those stocks and this article will discuss the recent hedge fund sentiment towards it.
Is Ctrip.com International Ltd. (ADR) (NASDAQ:CTRP) undervalued? It appears so, as the smart money is betting heavily on the stock. The number of bullish hedge fund bets advanced by 18 recently. CTRP was in 61 hedge funds’ portfolios at the end of the fourth quarter of 2015. There were 43 hedge funds in our database with CTRP holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Ingersoll-Rand PLC (NYSE:IR), First Data Corp (NYSE:FDC), and Spectra Energy Partners, LP (NYSE:SEP) to gather more data points.
Follow Trip.com Group Limited (NASDAQ:TCOM)
Follow Trip.com Group Limited (NASDAQ:TCOM)
Ctrip.com International Ltd. (ADR) (NASDAQ:CTRP) is a travel service provider of hotel accommodations, transportation ticketing, packaged tours and corporate travel management in China. The American Depositary Receipts (ADRs) of Ctrip.com have advanced by 73% over the past 12 months despite losing 16% since the beginning of 2016. The company primarily derives its revenue from commissions associated with accommodation reservations and transportation ticketing. Ctrip.com International generated revenue of RMB8.46 billion, or $1.33 billion, during the nine months that ended September 30, which was up by 47% year-over-year. The company’s revenue from its accommodation reservation business, which accounted for approximately 41% of total revenue, increased by 45% year-over-year to RMB3.43 billion, or $539.59 million. At the same time, transportation reservation revenue, which represented 38% of total revenue, grew by 47% year-over-year to RMB3.21 billion, or $504.98 million. Ctrip.com International Ltd. (ADR) (NASDAQ:CTRP) will release its fourth-quarter earnings report on March 16, so worldwide investors will soon get the chance to evaluate the impact of the softening Chinese economy on the company’s financial performance during the holiday quarter.
Just recently, a JPMorgan analyst revealed his top picks in the Chinese Internet sector, one of which was Ctrip.com International Ltd. (ADR) (NASDAQ:CTRP). The analyst believes that Ctrip.com’s long-term growth prospects are intact despite facing short-term macroeconomic challenges. The analyst has an ‘Overweight’ rating on Ctrip.com International and a price target of $50 on the stock, representing upside of about 28%. More importantly, the analyst believes that the company will witness strong margin improvement in the upcoming year.
Keeping this in mind, let’s check out the latest hedge fund activity surrounding Ctrip.com International Ltd. (ADR) (NASDAQ:CTRP).
What have hedge funds been doing with Ctrip.com International Ltd. (ADR) (NASDAQ:CTRP)?
At Q4’s end, a total of 61 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 42% leap from the previous quarter. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes considerably (or had already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP). Fisher Asset Management has a $409.5 million position in the stock, comprising 0.8% of its 13F portfolio. The second most bullish fund manager is OZ Management, managed by Daniel S. Och, which holds a $367.8 million position; 2% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish consist of Lei Zhang’s Hillhouse Capital Management, and Andreas Halvorsen’s Viking Global.
Consequently, specific money managers have jumped into Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) headfirst. Alkeon Capital Management, managed by Panayotis Takis Sparaggis, established the largest position in Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP). Alkeon Capital Management had $88.6 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also initiated a $88 million position during the quarter. The following funds were also among the new CTRP investors: Christopher R. Hansen’s Valiant Capital, Yen Liow’s Aravt Global, and Nehal Chopra’s Ratan Capital Group.
The final page of this article discusses the hedge fund activity in several companies with a market capitalization similar to that of Ctrip.com.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) but similarly valued. We will take a look at Ingersoll-Rand PLC (NYSE:IR), First Data Corp (NYSE:FDC), Spectra Energy Partners, LP (NYSE:SEP), and DTE Energy Co (NYSE:DTE). All of these stocks’ market caps are similar to CTRP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IR | 38 | 1680027 | -4 |
| FDC | 20 | 593370 | 20 |
| SEP | 5 | 31551 | -6 |
| DTE | 12 | 305914 | -4 |
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $653 million. That figure was $2.99 billion in CTRP’s case. Ingersoll-Rand PLC (NYSE:IR) is the most popular stock in this table. On the other hand Spectra Energy Partners, LP (NYSE:SEP) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
