Concerns over a shift in the Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, the Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25 and October 30. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller-cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Priceline Group Inc (NASDAQ:PCLN).
Priceline Group Inc (NASDAQ:PCLN) was in 86 hedge funds’ portfolios at the end of September. PCLN shareholders have witnessed an increase in hedge fund sentiment lately. There were 71 hedge funds in our database with PCLN positions at the end of the previous quarter. At the end of this article we will also compare PCLN to other stocks including Barclays PLC (ADR) (NYSE:BCS), Rio Tinto plc (ADR) (NYSE:RIO), and Morgan Stanley (NYSE:MS) to get a better sense of its popularity.
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If you’d ask most traders, hedge funds are seen as unimportant, outdated investment tools of years past. While there are greater than an 8,000 funds in operation at the moment, our researchers hone in on the bigwigs of this group, about 700 funds. These money managers orchestrate the lion’s share of all hedge funds’ total asset base, and by observing their inimitable investments, Insider Monkey has unearthed a number of investment strategies that have historically outperformed Mr. Market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, we’re going to analyze the latest action encompassing Priceline Group Inc (NASDAQ:PCLN).
How have hedgies been trading Priceline Group Inc (NASDAQ:PCLN)?
At the end of the third quarter, a total of 86 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 21% gain from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or had already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Stephen Mandel’s Lone Pine Capital has the most valuable position in Priceline Group Inc (NASDAQ:PCLN), worth close to $1.23 billion, corresponding to 5% of its total 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $929.3 million position of call options; the fund has 0.9% of its 13F portfolio invested in the holding. Remaining peers that are bullish comprise Eric W. Mandelblatt’s Soroban Capital Partners, John Armitage’s Egerton Capital Limited, and D E Shaw.
Now, key money managers have jumped into Priceline Group Inc (NASDAQ:PCLN) headfirst. Orbis Investment Management, managed by William B. Gray, assembled the largest position in Priceline.com Inc (NASDAQ:PCLN). Orbis Investment Management had $234.6 million invested in the company at the end of the quarter. Christopher James’ Partner Fund Management also initiated a $56.7 million position during the quarter. The other funds with brand new PCLN positions are Matthew Knauer and Mina Faltas’ Nokota Management, Stanley Druckenmiller’s Duquesne Capital, and Paul Tudor Jones’ Tudor Investment Corp.
Let’s check out hedge fund activity in other stocks similar to Priceline Group Inc (NASDAQ:PCLN). These stocks are Barclays PLC (ADR) (NYSE:BCS), Rio Tinto plc (ADR) (NYSE:RIO), Morgan Stanley (NYSE:MS), and Valeant Pharmaceuticals Intl Inc (NYSE:VRX). This group of stocks’ market valuations resemble PCLN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BCS | 15 | 324632 | 2 |
| RIO | 19 | 146726 | 1 |
| MS | 57 | 2391811 | 9 |
| VRX | 88 | 17733508 | -10 |
As you can see these stocks had an average of 44.75 hedge funds with bullish positions and the average amount invested in these stocks was $5.15 billion. That figure was $7.08 billion in PCLN’s case. Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is the most popular stock in this table. On the other hand Barclays PLC (ADR) (NYSE:BCS) is the least popular one with only 15 bullish hedge fund positions. Priceline Group Inc (NASDAQ:PCLN) is not the most popular stock in this group but hedge fund interest is still above average. This is a positive signal and though it isn’t quite as popular as Valeant, the sentiment for the two stocks is trending in opposite directions and it’s otherwise extremely popular compared to its market cap peers. Thus, it’s worth considering an addition of Priceline to one’s portfolio.
