We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Tripadvisor Inc (NASDAQ:TRIP).
Is Tripadvisor Inc (NASDAQ:TRIP) worth your attention right now? Hedge funds were taking a bearish view. The number of long hedge fund positions shrunk by 3 in recent months. Tripadvisor Inc (NASDAQ:TRIP) was in 33 hedge funds’ portfolios at the end of September. The all time high for this statistic is 45. Our calculations also showed that TRIP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Paul Reeder of PAR Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let’s review the recent hedge fund action regarding Tripadvisor Inc (NASDAQ:TRIP).
Do Hedge Funds Think TRIP Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. On the other hand, there were a total of 29 hedge funds with a bullish position in TRIP a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Paul Reeder and Edward Shapiro’s PAR Capital Management has the most valuable position in Tripadvisor Inc (NASDAQ:TRIP), worth close to $417.9 million, corresponding to 10% of its total 13F portfolio. Sitting at the No. 2 spot is Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, which holds a $108.9 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions encompass D. E. Shaw’s D E Shaw, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position PAR Capital Management allocated the biggest weight to Tripadvisor Inc (NASDAQ:TRIP), around 10.03% of its 13F portfolio. Shelter Haven Capital Management is also relatively very bullish on the stock, setting aside 5.71 percent of its 13F equity portfolio to TRIP.
Judging by the fact that Tripadvisor Inc (NASDAQ:TRIP) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few money managers that slashed their positions entirely heading into Q4. Interestingly, Alex Sacerdote’s Whale Rock Capital Management dropped the biggest position of all the hedgies tracked by Insider Monkey, totaling about $154.9 million in call options, and Leon Shaulov’s Maplelane Capital was right behind this move, as the fund dropped about $37.1 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 3 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Tripadvisor Inc (NASDAQ:TRIP) but similarly valued. We will take a look at National Vision Holdings, Inc. (NASDAQ:EYE), Lancaster Colony Corporation (NASDAQ:LANC), Simpson Manufacturing Co, Inc. (NYSE:SSD), Shoals Technologies Group, Inc. (NASDAQ:SHLS), Papa John’s International, Inc. (NASDAQ:PZZA), Shell Midstream Partners LP (NYSE:SHLX), and The Hanover Insurance Group, Inc. (NYSE:THG). This group of stocks’ market valuations are closest to TRIP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EYE | 16 | 397802 | -3 |
| LANC | 21 | 251251 | 3 |
| SSD | 19 | 177824 | 0 |
| SHLS | 13 | 63890 | 1 |
| PZZA | 33 | 744692 | 3 |
| SHLX | 6 | 17076 | 2 |
| THG | 14 | 56132 | -2 |
| Average | 17.4 | 244095 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $244 million. That figure was $831 million in TRIP’s case. Papa John’s International, Inc. (NASDAQ:PZZA) is the most popular stock in this table. On the other hand Shell Midstream Partners LP (NYSE:SHLX) is the least popular one with only 6 bullish hedge fund positions. Tripadvisor Inc (NASDAQ:TRIP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TRIP is 74. 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 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately TRIP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TRIP were disappointed as the stock returned -23.6% since the end of September (through 11/30) 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 many of these stocks already outperformed the market since 2019.
Follow Tripadvisor Inc. (NASDAQ:TRIP)
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Disclosure: None. This article was originally published at Insider Monkey.
