Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The fourth quarter of 2018 is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by nearly 7 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of trivago N.V. (NASDAQ:TRVG).
trivago N.V. (NASDAQ:TRVG) was in 13 hedge funds’ portfolios at the end of December. TRVG investors should be aware of an increase in hedge fund interest recently. There were 9 hedge funds in our database with TRVG positions at the end of the previous quarter. Our calculations also showed that trvg isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a peek at the latest hedge fund action encompassing trivago N.V. (NASDAQ:TRVG).
How are hedge funds trading trivago N.V. (NASDAQ:TRVG)?
Heading into the first quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 44% from the second quarter of 2018. By comparison, 10 hedge funds held shares or bullish call options in TRVG a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, PAR Capital Management held the most valuable stake in trivago N.V. (NASDAQ:TRVG), which was worth $73.8 million at the end of the third quarter. On the second spot was 683 Capital Partners which amassed $31.5 million worth of shares. Moreover, Altimeter Capital Management, Greenhouse Funds, and Millennium Management were also bullish on trivago N.V. (NASDAQ:TRVG), allocating a large percentage of their portfolios to this stock.
Now, key hedge funds were leading the bulls’ herd. Parian Global Management, managed by Zachary Miller, initiated the most valuable position in trivago N.V. (NASDAQ:TRVG). Parian Global Management had $5.1 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $0.5 million position during the quarter. The other funds with new positions in the stock are Mike Vranos’s Ellington, D. E. Shaw’s D E Shaw, and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.
Let’s now review hedge fund activity in other stocks similar to trivago N.V. (NASDAQ:TRVG). These stocks are Independent Bank Corp (NASDAQ:INDB), The Cheesecake Factory Incorporated (NASDAQ:CAKE), Dana Incorporated (NYSE:DAN), and Imperva Inc (NYSE:IMPV). This group of stocks’ market caps match TRVG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INDB | 9 | 12433 | 2 |
| CAKE | 21 | 176981 | 0 |
| DAN | 28 | 279360 | 0 |
| IMPV | 27 | 543478 | -2 |
| Average | 21.25 | 253063 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $253 million. That figure was $162 million in TRVG’s case. Dana Incorporated (NYSE:DAN) is the most popular stock in this table. On the other hand Independent Bank Corp (NASDAQ:INDB) is the least popular one with only 9 bullish hedge fund positions. trivago N.V. (NASDAQ:TRVG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately TRVG wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); TRVG investors were disappointed as the stock returned -28.8% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
