Was The Smart Money Right About Airbnb, Inc. (ABNB)?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Airbnb, Inc. (NASDAQ:ABNB).

Airbnb, Inc. (NASDAQ:ABNB) has seen an increase in hedge fund sentiment recently. Airbnb, Inc. (NASDAQ:ABNB) was in 58 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 68. Our calculations also showed that ABNB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are several gauges stock market investors employ to grade publicly traded companies. A pair of the less utilized gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can beat the market by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Stanley Druckenmiller of Duquesne Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium stock. 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. 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 homepage. Now let’s take a peek at the recent hedge fund action surrounding Airbnb, Inc. (NASDAQ:ABNB).

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

At the end of June, a total of 58 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the first quarter of 2020. On the other hand, there were a total of 0 hedge funds with a bullish position in ABNB a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

The largest stake in Airbnb, Inc. (NASDAQ:ABNB) was held by Citadel Investment Group, which reported holding $526.6 million worth of stock at the end of June. It was followed by Silver Lake Partners with a $391.9 million position. Other investors bullish on the company included Hillhouse Capital Management, SCGE Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Jericho Capital Asset Management allocated the biggest weight to Airbnb, Inc. (NASDAQ:ABNB), around 3.7% of its 13F portfolio. Hillhouse Capital Management is also relatively very bullish on the stock, designating 3.33 percent of its 13F equity portfolio to ABNB.

Now, key money managers were breaking ground themselves. Hillhouse Capital Management, managed by Lei Zhang, assembled the largest position in Airbnb, Inc. (NASDAQ:ABNB). Hillhouse Capital Management had $323.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $191.8 million position during the quarter. The following funds were also among the new ABNB investors: Renaissance Technologies, Stanley Druckenmiller’s Duquesne Capital, and Joseph Samuels’s Islet Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Airbnb, Inc. (NASDAQ:ABNB) but similarly valued. We will take a look at British American Tobacco plc (NYSE:BTI), Infosys Limited (NYSE:INFY), Booking Holdings Inc. (NASDAQ:BKNG), PetroChina Company Limited (NYSE:PTR), BP plc (NYSE:BP), Zoetis Inc (NYSE:ZTS), and Prologis Inc (NYSE:PLD). This group of stocks’ market values match ABNB’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.6 hedge funds with bullish positions and the average amount invested in these stocks was $2079 million. That figure was $2711 million in ABNB’s case. Booking Holdings Inc. (NASDAQ:BKNG) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 8 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 62.8. 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 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 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. Hedge funds were also right about betting on ABNB as the stock returned 11.4% since the end of Q2 (through 10/29) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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