Was The Smart Money Right About Booking Holdings Inc. (BKNG)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Booking Holdings Inc. (NASDAQ:BKNG) and determine whether the smart money was really smart about this stock.

Booking Holdings Inc. (NASDAQ:BKNG) investors should pay attention to a decrease in hedge fund sentiment recently. Booking Holdings Inc. (NASDAQ:BKNG) was in 96 hedge funds’ portfolios at the end of September. The all time high for this statistic is 113. There were 100 hedge funds in our database with BKNG positions at the end of the second quarter. Our calculations also showed that BKNG ranked 19th among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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 take a peek at the recent hedge fund action surrounding Booking Holdings Inc. (NASDAQ:BKNG).

David E. Shaw of D.E. Shaw

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

At third quarter’s end, a total of 96 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in BKNG over the last 25 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

More specifically, D E Shaw was the largest shareholder of Booking Holdings Inc. (NASDAQ:BKNG), with a stake worth $974.6 million reported as of the end of September. Trailing D E Shaw was Citadel Investment Group, which amassed a stake valued at $927.5 million. Ako Capital, GuardCap Asset Management, and Alkeon Capital Management 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 Marlowe Partners allocated the biggest weight to Booking Holdings Inc. (NASDAQ:BKNG), around 12.83% of its 13F portfolio. Proem Advisors is also relatively very bullish on the stock, dishing out 11.24 percent of its 13F equity portfolio to BKNG.

Seeing as Booking Holdings Inc. (NASDAQ:BKNG) has experienced bearish sentiment from hedge fund managers, we can see that there lies a certain “tier” of hedgies who sold off their full holdings heading into Q4. It’s worth mentioning that Daniel Sundheim’s D1 Capital Partners dropped the biggest stake of the 750 funds tracked by Insider Monkey, totaling an estimated $558.3 million in stock. Matthew Stadelman’s fund, Diamond Hill Capital, also dumped its stock, about $375.5 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 4 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Booking Holdings Inc. (NASDAQ:BKNG) but similarly valued. These stocks are GlaxoSmithKline plc (NYSE:GSK), Lockheed Martin Corporation (NYSE:LMT), Infosys Limited (NYSE:INFY), Prologis Inc (NYSE:PLD), Zoetis Inc (NYSE:ZTS), BP plc (NYSE:BP), and Snowflake Inc (NYSE:SNOW). All of these stocks’ market caps match BKNG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 43.3 hedge funds with bullish positions and the average amount invested in these stocks was $3462 million. That figure was $8430 million in BKNG’s case. Snowflake Inc (NYSE:SNOW) 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. Compared to these stocks Booking Holdings Inc. (NASDAQ:BKNG) is more popular among hedge funds. Our overall hedge fund sentiment score for BKNG is 86.5. 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 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on BKNG as the stock returned 3.5% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.

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