We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Tripadvisor Inc (NASDAQ:TRIP).
Tripadvisor Inc (NASDAQ:TRIP) was in 39 hedge funds’ portfolios at the end of the fourth quarter of 2019. TRIP has seen an increase in hedge fund interest recently. There were 32 hedge funds in our database with TRIP holdings at the end of the previous quarter. Our calculations also showed that TRIP isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
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 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 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.
Boykin Curry of Eagle Capital
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s view the recent hedge fund action encompassing Tripadvisor Inc (NASDAQ:TRIP).
How have hedgies been trading Tripadvisor Inc (NASDAQ:TRIP)?
At the end of the fourth quarter, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards TRIP over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, Eagle Capital Management was the largest shareholder of Tripadvisor Inc (NASDAQ:TRIP), with a stake worth $257 million reported as of the end of September. Trailing Eagle Capital Management was PAR Capital Management, which amassed a stake valued at $102.7 million. Renaissance Technologies, AQR Capital Management, and D E Shaw 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 Raging Capital Management allocated the biggest weight to Tripadvisor Inc (NASDAQ:TRIP), around 2.5% of its 13F portfolio. PAR Capital Management is also relatively very bullish on the stock, earmarking 2 percent of its 13F equity portfolio to TRIP.
As one would reasonably expect, key hedge funds were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the biggest position in Tripadvisor Inc (NASDAQ:TRIP). Arrowstreet Capital had $35.1 million invested in the company at the end of the quarter. William C. Martin’s Raging Capital Management also initiated a $14.4 million position during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Matthew L Pinz’s Pinz Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Tripadvisor Inc (NASDAQ:TRIP) but similarly valued. We will take a look at Brighthouse Financial, Inc. (NASDAQ:BHF), Echostar Corporation (NASDAQ:SATS), CoreSite Realty Corp (NYSE:COR), and NIO Inc. (NYSE:NIO). All of these stocks’ market caps resemble TRIP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BHF | 43 | 610609 | 14 |
| SATS | 26 | 641376 | -6 |
| COR | 21 | 254981 | 4 |
| NIO | 16 | 68386 | 3 |
| Average | 26.5 | 393838 | 3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $394 million. That figure was $794 million in TRIP’s case. Brighthouse Financial, Inc. (NASDAQ:BHF) is the most popular stock in this table. On the other hand NIO Inc. (NYSE:NIO) is the least popular one with only 16 bullish hedge fund positions. Tripadvisor Inc (NASDAQ:TRIP) 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately TRIP wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TRIP were disappointed as the stock returned -35% during the same time period and underperformed 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.
