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 Booking Holdings Inc. (NASDAQ:BKNG).
Booking Holdings Inc. (NASDAQ:BKNG) has seen a decrease in activity from the world’s largest hedge funds lately. Our calculations also showed that BKNG 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).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Donald Yacktman of Yacktman Asset Management
We leave no stone unturned when looking for the next great investment idea. For example, this trader is claiming triple digit returns, so we check out his latest trade recommendations We are probably at the peak of the COVID-19 pandemic, so we check out this biotech investor’s coronavirus picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). 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 we’re going to go over the recent hedge fund action surrounding Booking Holdings Inc. (NASDAQ:BKNG).
How have hedgies been trading Booking Holdings Inc. (NASDAQ:BKNG)?
At the end of the fourth quarter, a total of 74 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. By comparison, 84 hedge funds held shares or bullish call options in BKNG a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in Booking Holdings Inc. (NASDAQ:BKNG), which was worth $753.7 million at the end of the third quarter. On the second spot was Yacktman Asset Management which amassed $435.7 million worth of shares. AQR Capital Management, Stockbridge Partners, and PAR 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 Harvard Management Co allocated the biggest weight to Booking Holdings Inc. (NASDAQ:BKNG), around 20.59% of its 13F portfolio. BlueDrive Global Investors is also relatively very bullish on the stock, setting aside 16.96 percent of its 13F equity portfolio to BKNG.
Since Booking Holdings Inc. (NASDAQ:BKNG) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few fund managers that slashed their entire stakes heading into Q4. It’s worth mentioning that Lone Pine Capital cut the largest stake of all the hedgies tracked by Insider Monkey, worth about $414.6 million in stock. Tim Hurd and Ed Magnus’s fund, BlueSpruce Investments, also sold off its stock, about $175.8 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 13 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. We will take a look at Fidelity National Information Services Inc. (NYSE:FIS), Sony Corporation (NYSE:SNE), Morgan Stanley (NYSE:MS), and Gilead Sciences, Inc. (NASDAQ:GILD). This group of stocks’ market caps are similar to BKNG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FIS | 105 | 8073588 | 10 |
| SNE | 26 | 761509 | -1 |
| MS | 60 | 3846065 | -8 |
| GILD | 67 | 3722904 | 1 |
| Average | 64.5 | 4101017 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 64.5 hedge funds with bullish positions and the average amount invested in these stocks was $4101 million. That figure was $5579 million in BKNG’s case. Fidelity National Information Services Inc. (NYSE:FIS) is the most popular stock in this table. On the other hand Sony Corporation (NYSE:SNE) is the least popular one with only 26 bullish hedge fund positions. Booking Holdings Inc. (NASDAQ:BKNG) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 1.0% in 2020 through April 20th but beat the market by 11 percentage points. Unfortunately BKNG wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BKNG were disappointed as the stock returned -31.3% 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 10 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.
