Hedge Funds Are Selling Expedia Inc (EXPE)

Is Expedia Inc (NASDAQ:EXPE) a cheap investment today? Investors who are in the know are taking a pessimistic view. The number of bullish hedge fund positions went down by 4 lately.

In the eyes of most traders, hedge funds are seen as slow, old financial tools of years past. While there are greater than 8000 funds in operation at present, we choose to focus on the crème de la crème of this club, close to 450 funds. It is widely believed that this group controls most of the smart money’s total asset base, and by tracking their highest performing picks, we have deciphered a number of investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Equally as integral, optimistic insider trading activity is a second way to parse down the stock market universe. There are lots of reasons for a bullish insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Many academic studies have demonstrated the valuable potential of this method if you understand where to look (learn more here).

Now, it’s important to take a peek at the latest action regarding Expedia Inc (NASDAQ:EXPE).

What does the smart money think about Expedia Inc (NASDAQ:EXPE)?

In preparation for this quarter, a total of 32 of the hedge funds we track held long positions in this stock, a change of -11% from the first quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings meaningfully.

Of the funds we track, JANA Partners, managed by Barry Rosenstein, holds the biggest position in Expedia Inc (NASDAQ:EXPE). JANA Partners has a $115.7 million position in the stock, comprising 2.4% of its 13F portfolio. Sitting at the No. 2 spot is Robert Pitts of Steadfast Capital Management, with a $90.6 million position; 2.4% of its 13F portfolio is allocated to the company. Some other hedge funds that are bullish include Andreas Halvorsen’s Viking Global, Steven Cohen’s SAC Capital Advisors and Paul Reeder and Edward Shapiro’s PAR Capital Management.

Since Expedia Inc (NASDAQ:EXPE) has witnessed a declination in interest from the smart money, logic holds that there lies a certain “tier” of fund managers that elected to cut their full holdings in Q1. At the top of the heap, Paul Reeder and Edward Shapiro’s PAR Capital Management sold off the largest stake of the “upper crust” of funds we watch, worth close to $75 million in stock., and John Thaler of JAT Capital Management was right behind this move, as the fund sold off about $60.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 4 funds in Q1.

What have insiders been doing with Expedia Inc (NASDAQ:EXPE)?

Insider buying is most useful when the company we’re looking at has seen transactions within the past half-year. Over the latest 180-day time period, Expedia Inc (NASDAQ:EXPE) has experienced 1 unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Expedia Inc (NASDAQ:EXPE). These stocks are Marriott International Inc (NYSE:MAR), Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT), Hyatt Hotels Corporation (NYSE:H), Wyndham Worldwide Corporation (NYSE:WYN), and InterContinental Hotels Group PLC (ADR) (NYSE:IHG). This group of stocks belong to the 0 industry and their market caps match EXPE’s market cap.