Is Trip.com Group Limited (NASDAQ:TCOM) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is TCOM a good stock to buy now? Prominent investors were becoming hopeful. The number of bullish hedge fund bets rose by 1 in recent months. Trip.com Group Limited (NASDAQ:TCOM) was in 30 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 67. Our calculations also showed that TCOM isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Kerr Neilson of Platinum Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Now we’re going to take a peek at the recent hedge fund action regarding Trip.com Group Limited (NASDAQ:TCOM).
Do Hedge Funds Think TCOM Is A Good Stock To Buy Now?
At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from one quarter earlier. On the other hand, there were a total of 39 hedge funds with a bullish position in TCOM a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Fisher’s Fisher Asset Management has the biggest position in Trip.com Group Limited (NASDAQ:TCOM), worth close to $308.7 million, comprising 0.3% of its total 13F portfolio. Coming in second is Kerr Neilson of Platinum Asset Management, with a $228.2 million position; the fund has 5.6% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism include Renaissance Technologies, Richard S. Pzena’s Pzena Investment Management and Hyder Ahmad’s Broad Peak Investment Holdings. In terms of the portfolio weights assigned to each position Kontiki Capital allocated the biggest weight to Trip.com Group Limited (NASDAQ:TCOM), around 12.2% of its 13F portfolio. Broad Peak Investment Holdings is also relatively very bullish on the stock, earmarking 8.6 percent of its 13F equity portfolio to TCOM.
As industrywide interest jumped, specific money managers have jumped into Trip.com Group Limited (NASDAQ:TCOM) headfirst. Holocene Advisors, managed by Brandon Haley, initiated the largest position in Trip.com Group Limited (NASDAQ:TCOM). Holocene Advisors had $74.6 million invested in the company at the end of the quarter. Joseph Samuels’s Islet Management also initiated a $9.3 million position during the quarter. The following funds were also among the new TCOM investors: Steve Cohen’s Point72 Asset Management, Matthew Moskey and Friedrich Schulte-Hillen’s Athos Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Trip.com Group Limited (NASDAQ:TCOM) but similarly valued. We will take a look at Northern Trust Corporation (NASDAQ:NTRS), Cheniere Energy Partners LP (NYSE:CQP), TransUnion (NYSE:TRU), International Paper Company (NYSE:IP), Teleflex Incorporated (NYSE:TFX), CBRE Group, Inc. (NYSE:CBRE), and Arista Networks Inc (NYSE:ANET). This group of stocks’ market caps are closest to TCOM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NTRS | 28 | 272255 | -7 |
| CQP | 3 | 8628 | 0 |
| TRU | 47 | 1684887 | 0 |
| IP | 32 | 199317 | 3 |
| TFX | 40 | 753356 | 12 |
| CBRE | 24 | 1609802 | -5 |
| ANET | 27 | 333863 | -6 |
| Average | 28.7 | 694587 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $695 million. That figure was $1526 million in TCOM’s case. TransUnion (NYSE:TRU) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSE:CQP) is the least popular one with only 3 bullish hedge fund positions. Trip.com Group Limited (NASDAQ:TCOM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TCOM is 50.1. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on TCOM, though not to the same extent, as the stock returned 11.1% since Q3 (through December 18th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
