Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before last year’s Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first half of 2019, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first half still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Booking Holdings Inc. (NASDAQ:BKNG) changed recently.
Booking Holdings Inc. (NASDAQ:BKNG) investors should be aware of an increase in support from the world’s most elite money managers lately. BKNG was in 78 hedge funds’ portfolios at the end of September. There were 72 hedge funds in our database with BKNG holdings at the end of the previous quarter. Our calculations also showed that BKNG currently ranks 24th among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
To most traders, hedge funds are viewed as unimportant, old financial tools of the past. While there are greater than 8000 funds with their doors open at the moment, Our experts choose to focus on the upper echelon of this club, around 750 funds. These hedge fund managers watch over the majority of all hedge funds’ total capital, and by following their unrivaled picks, Insider Monkey has come up with a few investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Donald Yacktman of Yacktman Asset Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind we’re going to review the latest hedge fund action regarding Booking Holdings Inc. (NASDAQ:BKNG).
Hedge fund activity in Booking Holdings Inc. (NASDAQ:BKNG)
Heading into the fourth quarter of 2019, a total of 78 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BKNG over the last 17 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Yacktman Asset Management held the most valuable stake in Booking Holdings Inc. (NASDAQ:BKNG), which was worth $417.8 million at the end of the third quarter. On the second spot was Lone Pine Capital which amassed $414.6 million worth of shares. D E Shaw, Melvin Capital Management, and PAR Capital Management 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 Kontiki Capital allocated the biggest weight to Booking Holdings Inc. (NASDAQ:BKNG), around 22.52% of its 13F portfolio. Harvard Management Co is also relatively very bullish on the stock, dishing out 16.19 percent of its 13F equity portfolio to BKNG.
As industrywide interest jumped, some big names were leading the bulls’ herd. Renaissance Technologies initiated the most valuable position in Booking Holdings Inc. (NASDAQ:BKNG). Renaissance Technologies had $25.9 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also made a $8.1 million investment in the stock during the quarter. The following funds were also among the new BKNG investors: Philippe Laffont’s Coatue Management, Paul Tudor Jones’s Tudor Investment Corp, and Sculptor Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Booking Holdings Inc. (NASDAQ:BKNG) but similarly valued. These stocks are Bristol-Myers Squibb Company (NYSE:BMY), CVS Health Corporation (NYSE:CVS), Itau Unibanco Holding SA (NYSE:ITUB), and Fidelity National Information Services Inc. (NYSE:FIS). All of these stocks’ market caps match BKNG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BMY | 56 | 3842079 | -9 |
| CVS | 47 | 924996 | -8 |
| ITUB | 17 | 1060568 | -1 |
| FIS | 90 | 7126015 | 31 |
| Average | 52.5 | 3238415 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 52.5 hedge funds with bullish positions and the average amount invested in these stocks was $3238 million. That figure was $5427 million in BKNG’s case. Fidelity National Information Services Inc. (NYSE:FIS) is the most popular stock in this table. On the other hand Itau Unibanco Holding SA (NYSE:ITUB) is the least popular one with only 17 bullish hedge fund positions. Booking Holdings Inc. (NASDAQ:BKNG) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately BKNG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BKNG were disappointed as the stock returned 18% in 2019 (through December 23rd) and trailed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
