Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Despegar.com, Corp. (NYSE:DESP) changed recently.
Is Despegar.com, Corp. (NYSE:DESP) a marvelous investment right now? The best stock pickers were getting more optimistic. The number of long hedge fund bets moved up by 4 recently. Despegar.com, Corp. (NYSE:DESP) was in 22 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that DESP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 18 hedge funds in our database with DESP holdings at the end of March.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Chase Coleman of Tiger Global
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to take a look at the latest hedge fund action regarding Despegar.com, Corp. (NYSE:DESP).
Do Hedge Funds Think DESP Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DESP over the last 24 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Despegar.com, Corp. (NYSE:DESP) was held by Ancient Art (Teton Capital), which reported holding $50.6 million worth of stock at the end of June. It was followed by Tiger Global Management LLC with a $42.3 million position. Other investors bullish on the company included Cartica Management, Southpoint Capital Advisors, and Moerus Capital Management. In terms of the portfolio weights assigned to each position Cartica Management allocated the biggest weight to Despegar.com, Corp. (NYSE:DESP), around 6.56% of its 13F portfolio. Moerus Capital Management is also relatively very bullish on the stock, earmarking 5.95 percent of its 13F equity portfolio to DESP.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Southpoint Capital Advisors, managed by John Smith Clark, established the most valuable position in Despegar.com, Corp. (NYSE:DESP). Southpoint Capital Advisors had $19.8 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $3.3 million investment in the stock during the quarter. The other funds with brand new DESP positions are Sander Gerber’s Hudson Bay Capital Management, Paul Tudor Jones’s Tudor Investment Corp, and David Kowitz and Sheldon Kasowitz’s Indus Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Despegar.com, Corp. (NYSE:DESP) but similarly valued. These stocks are Omeros Corporation (NASDAQ:OMER), Nabors Industries Ltd. (NYSE:NBR), G1 Therapeutics, Inc. (NASDAQ:GTHX), American Finance Trust, Inc. (NASDAQ:AFIN), Guild Holdings Company (NYSE:GHLD), Corporacion America Airports SA (NYSE:CAAP), and Brooge Energy Limited (NASDAQ:BROG). This group of stocks’ market caps match DESP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OMER | 11 | 72648 | -1 |
| NBR | 15 | 51488 | 0 |
| GTHX | 9 | 52065 | -3 |
| AFIN | 13 | 25216 | 6 |
| GHLD | 5 | 46577 | -2 |
| CAAP | 3 | 1905 | 1 |
| BROG | 6 | 32227 | 0 |
| Average | 8.9 | 40304 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.9 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $212 million in DESP’s case. Nabors Industries Ltd. (NYSE:NBR) is the most popular stock in this table. On the other hand Corporacion America Airports SA (NYSE:CAAP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Despegar.com, Corp. (NYSE:DESP) is more popular among hedge funds. Our overall hedge fund sentiment score for DESP is 89. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately DESP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DESP were disappointed as the stock returned -13.5% since the end of the second quarter (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Despegar.com Corp. (NYSE:DESP)
Follow Despegar.com Corp. (NYSE:DESP)
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Disclosure: None. This article was originally published at Insider Monkey.
