Were Hedge Funds Right About Tripadvisor Inc (TRIP)?

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 Tripadvisor Inc (NASDAQ:TRIP) and determine whether the smart money was really smart about this stock.

Tripadvisor Inc (NASDAQ:TRIP) investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. Tripadvisor Inc (NASDAQ:TRIP) was in 33 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 45. Our calculations also showed that TRIP isn’t 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 view the new hedge fund action regarding Tripadvisor Inc (NASDAQ:TRIP).

David E. Shaw of D.E. Shaw

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

At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the second quarter of 2021. By comparison, 29 hedge funds held shares or bullish call options in TRIP a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, PAR Capital Management held the most valuable stake in Tripadvisor Inc (NASDAQ:TRIP), which was worth $417.9 million at the end of the third quarter. On the second spot was Polar Capital which amassed $108.9 million worth of shares. D E Shaw, Two Sigma Advisors, and Citadel Investment Group 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 PAR Capital Management allocated the biggest weight to Tripadvisor Inc (NASDAQ:TRIP), around 10.03% of its 13F portfolio. Shelter Haven Capital Management is also relatively very bullish on the stock, setting aside 5.71 percent of its 13F equity portfolio to TRIP.

Judging by the fact that Tripadvisor Inc (NASDAQ:TRIP) has experienced bearish sentiment from the smart money, it’s easy to see that there were a few hedge funds who sold off their positions entirely heading into Q4. At the top of the heap, Alex Sacerdote’s Whale Rock Capital Management dropped the biggest position of the 750 funds monitored by Insider Monkey, worth about $154.9 million in call options. Leon Shaulov’s fund, Maplelane Capital, also dropped its call options, about $37.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 3 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Tripadvisor Inc (NASDAQ:TRIP) but similarly valued. We will take a look at National Vision Holdings, Inc. (NASDAQ:EYE), Lancaster Colony Corporation (NASDAQ:LANC), Simpson Manufacturing Co, Inc. (NYSE:SSD), Shoals Technologies Group, Inc. (NASDAQ:SHLS), Papa John’s International, Inc. (NASDAQ:PZZA), Shell Midstream Partners LP (NYSE:SHLX), and The Hanover Insurance Group, Inc. (NYSE:THG). This group of stocks’ market valuations match TRIP’s market valuation.

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As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $244 million. That figure was $831 million in TRIP’s case. Papa John’s International, Inc. (NASDAQ:PZZA) is the most popular stock in this table. On the other hand Shell Midstream Partners LP (NYSE:SHLX) is the least popular one with only 6 bullish hedge fund positions. Tripadvisor Inc (NASDAQ:TRIP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TRIP is 74. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, TRIP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TRIP were disappointed as the stock returned -19.8% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.

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