Hedge Funds Are Selling Tripadvisor Inc (TRIP)

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 Tripadvisor Inc (NASDAQ:TRIP) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Is Tripadvisor Inc (NASDAQ:TRIP) undervalued? Prominent investors were reducing their bets on the stock. The number of bullish hedge fund positions dropped by 2 in recent months. Tripadvisor Inc (NASDAQ:TRIP) was in 28 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 43. Our calculations also showed that TRIP 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Gil Simon of SoMa Equity Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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. With all of this in mind let’s take a look at the latest hedge fund action surrounding Tripadvisor Inc (NASDAQ:TRIP).

What have hedge funds been doing with Tripadvisor Inc (NASDAQ:TRIP)?

Heading into the third quarter of 2020, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TRIP over the last 20 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Eagle Capital Management was the largest shareholder of Tripadvisor Inc (NASDAQ:TRIP), with a stake worth $156.9 million reported as of the end of September. Trailing Eagle Capital Management was Renaissance Technologies, which amassed a stake valued at $107.8 million. Polar Capital, SoMa Equity Partners, and Arrowstreet Capital 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 SoMa Equity Partners allocated the biggest weight to Tripadvisor Inc (NASDAQ:TRIP), around 2.59% of its 13F portfolio. Contrarius Investment Management is also relatively very bullish on the stock, setting aside 2.56 percent of its 13F equity portfolio to TRIP.

Because Tripadvisor Inc (NASDAQ:TRIP) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedgies that slashed their entire stakes heading into Q3. Intriguingly, William C. Martin’s Raging Capital Management dumped the biggest position of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $4.4 million in stock, and Joel Greenblatt’s Gotham Asset Management was right behind this move, as the fund sold off about $3.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds heading into Q3.

Let’s check out hedge fund activity in other stocks similar to Tripadvisor Inc (NASDAQ:TRIP). We will take a look at Canada Goose Holdings Inc. (NYSE:GOOS), PotlatchDeltic Corporation (NASDAQ:PCH), Taro Pharmaceutical Industries Ltd. (NYSE:TARO), Benitec Biopharma Inc. (NASDAQ:BNTC), Home Bancshares Inc (Conway, AR) (NASDAQ:HOMB), CVB Financial Corp. (NASDAQ:CVBF), and Merit Medical Systems, Inc. (NASDAQ:MMSI). This group of stocks’ market caps match TRIP’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.9 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $641 million in TRIP’s case. PotlatchDeltic Corporation (NASDAQ:PCH) is the most popular stock in this table. On the other hand Benitec Biopharma Inc. (NASDAQ:BNTC) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Tripadvisor Inc (NASDAQ:TRIP) is more popular among hedge funds. Our overall hedge fund sentiment score for TRIP is 72.5. 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 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 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. Unfortunately TRIP wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TRIP were disappointed as the stock returned 1.6% since the end of the second quarter 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 most of these stocks already outperformed the market in 2020.

Disclosure: None. This article was originally published at Insider Monkey.