Should I Buy Airbnb, Inc. (ABNB)?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Airbnb, Inc. (NASDAQ:ABNB) changed recently.

Airbnb, Inc. (NASDAQ:ABNB) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 58 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that ABNB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Stryker Corporation (NYSE:SYK), Atlassian Corporation Plc (NASDAQ:TEAM), and Booking Holdings Inc. (NASDAQ:BKNG) to gather more data points.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s review the new hedge fund action surrounding Airbnb, Inc. (NASDAQ:ABNB).

Paul Marshall of Marshall Wace

Do Hedge Funds Think ABNB Is A Good Stock To Buy Now?

At the end of September, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in ABNB a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

The largest stake in Airbnb, Inc. (NASDAQ:ABNB) was held by Citadel Investment Group, which reported holding $498.3 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $465.4 million position. Other investors bullish on the company included Silver Lake Partners, SCGE Management, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position Kayak Investment Partners allocated the biggest weight to Airbnb, Inc. (NASDAQ:ABNB), around 5.56% of its 13F portfolio. Emerson Point Capital is also relatively very bullish on the stock, setting aside 5.52 percent of its 13F equity portfolio to ABNB.

Since Airbnb, Inc. (NASDAQ:ABNB) has experienced bearish sentiment from the smart money, it’s safe to say that there were a few hedgies that decided to sell off their entire stakes by the end of the third quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising close to $39.8 million in stock. Joseph Samuels’s fund, Islet Management, also sold off its stock, about $30.6 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Airbnb, Inc. (NASDAQ:ABNB). These stocks are Stryker Corporation (NYSE:SYK), Atlassian Corporation Plc (NASDAQ:TEAM), Booking Holdings Inc. (NASDAQ:BKNG), GlaxoSmithKline plc (NYSE:GSK), Lockheed Martin Corporation (NYSE:LMT), Infosys Limited (NYSE:INFY), and Prologis Inc (NYSE:PLD). This group of stocks’ market caps resemble ABNB’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 49.3 hedge funds with bullish positions and the average amount invested in these stocks was $3396 million. That figure was $2713 million in ABNB’s case. Booking Holdings Inc. (NASDAQ:BKNG) is the most popular stock in this table. On the other hand Infosys Limited (NYSE:INFY) is the least popular one with only 29 bullish hedge fund positions. Airbnb, Inc. (NASDAQ:ABNB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ABNB is 52.2. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately ABNB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ABNB were disappointed as the stock returned 2.9% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.