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Is Ctrip.com International, Ltd. (CTRP) A Good Stock To Buy?

Nina Todic

"Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn't by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today's darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn't attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal," said Vilas Fund in its Q1 investor letter. We aren't sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Ctrip.com International, Ltd. (NASDAQ:CTRP).

Ctrip.com International, Ltd. (NASDAQ:CTRP) was in 29 hedge funds' portfolios at the end of the first quarter of 2019. CTRP has experienced an increase in enthusiasm from smart money lately. There were 21 hedge funds in our database with CTRP positions at the end of the previous quarter. Our calculations also showed that ctrp isn't among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Eashwar Krishnan - Tybourne Capital

We're going to view the recent hedge fund action surrounding Ctrip.com International, Ltd. (NASDAQ:CTRP).

How are hedge funds trading Ctrip.com International, Ltd. (NASDAQ:CTRP)?

At Q1's end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 38% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in CTRP a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with CTRP Positions

When looking at the institutional investors followed by Insider Monkey, Eashwar Krishnan's Tybourne Capital Management has the biggest position in Ctrip.com International, Ltd. (NASDAQ:CTRP), worth close to $277.8 million, corresponding to 10.8% of its total 13F portfolio. Coming in second is Fisher Asset Management, led by Ken Fisher, holding a $276.8 million position; 0.4% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions include Jim Simons's Renaissance Technologies, D. E. Shaw's D E Shaw and Larry Chen and Terry Zhang's Tairen Capital.

As one would reasonably expect, some big names have been driving this bullishness. Tairen Capital, managed by Larry Chen and Terry Zhang, created the largest position in Ctrip.com International, Ltd. (NASDAQ:CTRP). Tairen Capital had $82.5 million invested in the company at the end of the quarter. James Crichton's Hitchwood Capital Management also made a $69.9 million investment in the stock during the quarter. The other funds with new positions in the stock are D. E. Shaw's D E Shaw, Noam Gottesman's GLG Partners, and George Soros's Soros Fund Management.

Let's now take a look at hedge fund activity in other stocks similar to Ctrip.com International, Ltd. (NASDAQ:CTRP). These stocks are Archer-Daniels-Midland Company (NYSE:ADM), Barrick Gold Corporation (NYSE:GOLD), TransDigm Group Incorporated (NYSE:TDG), and Royal Caribbean Cruises Ltd. (NYSE:RCL). This group of stocks' market valuations match CTRP's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ADM,25,625238,-4 GOLD,37,956008,1 TDG,52,4683686,5 RCL,47,1572558,-5 Average,40.25,1959373,-0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 40.25 hedge funds with bullish positions and the average amount invested in these stocks was $1959 million. That figure was $1289 million in CTRP's case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand Archer-Daniels-Midland Company (NYSE:ADM) is the least popular one with only 25 bullish hedge fund positions. Ctrip.com International, Ltd. (NASDAQ:CTRP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately CTRP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CTRP investors were disappointed as the stock returned -20.6% 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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

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