Is Booking Holdings Inc. (NASDAQ:BKNG) a good place to invest some of your money right now? We are going to take a look at hedge fund activity surrounding BKNG as well as its peers like Bristol Myers Squibb Company (NYSE:BMY), CVS Health Corporation (NYSE:CVS), Itau Unibanco Holding SA (NYSE:ITUB), and Fidelity National Information Services Inc. (NYSE:FIS) to answer this questions. We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Booking Holdings Inc. (NASDAQ:BKNG) shareholders have witnessed an increase in hedge fund sentiment in recent months. BKNG was in 78 hedge funds' portfolios at the end of the third quarter of 2019. There were 72 hedge funds in our database with BKNG holdings at the end of the previous quarter. Our calculations also showed that BKNG isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_221324" align="aligncenter" width="450"] Donald Yacktman of Yacktman Asset Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let's go over the recent hedge fund action encompassing Booking Holdings Inc. (NASDAQ:BKNG).
What does smart money think about Booking Holdings Inc. (NASDAQ:BKNG)?
At Q3's end, a total of 78 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. By comparison, 68 hedge funds held shares or bullish call options in BKNG a year ago. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Among these funds, Yacktman Asset Management held the most valuable stake in Booking Holdings Inc. (NASDAQ:BKNG), which was worth $417.8 million at the end of the third quarter. On the second spot was Lone Pine Capital which amassed $414.6 million worth of shares. D E Shaw, Melvin Capital Management, 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 Kontiki Capital allocated the biggest weight to Booking Holdings Inc. (NASDAQ:BKNG), around 22.52% of its portfolio. Harvard Management Co is also relatively very bullish on the stock, setting aside 16.19 percent of its 13F equity portfolio to BKNG.
Now, key money managers were leading the bulls' herd. Renaissance Technologies, founded by Jim Simons, initiated the most outsized position in Booking Holdings Inc. (NASDAQ:BKNG). Renaissance Technologies had $25.9 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley's Polar Capital also initiated a $8.1 million position during the quarter. The other funds with brand new BKNG positions are Philippe Laffont's Coatue Management, Paul Tudor Jones's Tudor Investment Corp, and Sculptor Capital.
Let's go over 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 Bristol Myers Squibb Company (NYSE:BMY), CVS Health Corporation (NYSE:CVS), Itau Unibanco Holding SA (NYSE:ITUB), and Fidelity National Information Services Inc. (NYSE:FIS). This group of stocks' market caps match BKNG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BMY,56,3842079,-9 CVS,47,924996,-8 ITUB,17,1060568,-1 FIS,90,7126015,31 Average,52.5,3238415,3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 52.5 hedge funds with bullish positions and the average amount invested in these stocks was $3238 million. That figure was $5427 million in BKNG's case. Fidelity National Information Services Inc. (NYSE:FIS) is the most popular stock in this table. On the other hand Itau Unibanco Holding SA (NYSE:ITUB) is the least popular one with only 17 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 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately BKNG wasn't nearly as popular as these 20 stocks and hedge funds that were betting on BKNG were disappointed as the stock returned -4.3% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.