You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund managers like Jeff Ubben, George Soros and Seth Klarman hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Travelport Worldwide Ltd (NYSE:TVPT) investors should pay attention to an increase in support from the world’s most elite money managers lately. Our calculations also showed that TVPT isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to go over the fresh hedge fund action surrounding Travelport Worldwide Ltd (NYSE:TVPT).
What have hedge funds been doing with Travelport Worldwide Ltd (NYSE:TVPT)?
At the end of the fourth quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in TVPT a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Among these funds, Elliott Management held the most valuable stake in Travelport Worldwide Ltd (NYSE:TVPT), which was worth $105.5 million at the end of the third quarter. On the second spot was Alpine Associates which amassed $72.6 million worth of shares. Moreover, Paulson & Co, Citadel Investment Group, and Water Island Capital were also bullish on Travelport Worldwide Ltd (NYSE:TVPT), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key hedge funds have jumped into Travelport Worldwide Ltd (NYSE:TVPT) headfirst. Alpine Associates, managed by Robert Emil Zoellner, assembled the most valuable position in Travelport Worldwide Ltd (NYSE:TVPT). Alpine Associates had $72.6 million invested in the company at the end of the quarter. John Paulson’s Paulson & Co also initiated a $55.5 million position during the quarter. The other funds with brand new TVPT positions are Michael Doheny’s Freshford Capital Management, Amit Nitin Doshi’s Harbor Spring Capital, and Amit Nitin Doshi’s Harbor Spring Capital.
Let’s go over hedge fund activity in other stocks similar to Travelport Worldwide Ltd (NYSE:TVPT). These stocks are SITE Centers Corp. (NYSE:SITC), El Paso Electric Company (NYSE:EE), Agree Realty Corporation (NYSE:ADC), and Descartes Systems Group (NASDAQ:DSGX). This group of stocks’ market values are similar to TVPT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SITC | 15 | 91617 | 3 |
| EE | 23 | 274242 | 8 |
| ADC | 11 | 52478 | -3 |
| DSGX | 12 | 66040 | 3 |
| Average | 15.25 | 121094 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $458 million in TVPT’s case. El Paso Electric Company (NYSE:EE) is the most popular stock in this table. On the other hand Agree Realty Corporation (NYSE:ADC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Travelport Worldwide Ltd (NYSE:TVPT) is more popular among hedge funds. 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 TVPT wasn’t nearly as popular as these 15 stock and hedge funds that were betting on TVPT were disappointed as the stock returned 0.5% 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.
