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 have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31 holdings, data that is available nowhere else. Should you consider Despegar.com, Corp. (NYSE:DESP) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Despegar.com, Corp. (NYSE:DESP) investors should pay attention to an increase in hedge fund interest recently. Our calculations also showed that desp isn't among the 30 most popular stocks among hedge funds.
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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let's take a peek at the recent hedge fund action regarding Despegar.com, Corp. (NYSE:DESP).
What does the smart money think about Despegar.com, Corp. (NYSE:DESP)?
At Q4's end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 46% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in DESP a year ago. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
More specifically, Tiger Global Management LLC was the largest shareholder of Despegar.com, Corp. (NYSE:DESP), with a stake worth $152.3 million reported as of the end of December. Trailing Tiger Global Management LLC was Two Creeks Capital Management, which amassed a stake valued at $8.1 million. Bares Capital Management, Echo Street Capital Management, and Prince Street Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key money managers have been driving this bullishness. Bares Capital Management, managed by Brian Bares, established the most valuable position in Despegar.com, Corp. (NYSE:DESP). Bares Capital Management had $7.2 million invested in the company at the end of the quarter. David Halpert's Prince Street Capital Management also made a $5.9 million investment in the stock during the quarter. The following funds were also among the new DESP investors: Ari Zweiman's 683 Capital Partners, Ken Griffin's Citadel Investment Group, and D. E. Shaw's D E Shaw.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Despegar.com, Corp. (NYSE:DESP) but similarly valued. We will take a look at CTS Corporation (NYSE:CTS), Oil States International, Inc. (NYSE:OIS), Keane Group, Inc. (NYSE:FRAC), and Trupanion Inc (NASDAQ:TRUP). This group of stocks' market values are closest to DESP's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CTS,12,86244,2 OIS,10,21733,-1 FRAC,26,441615,8 TRUP,10,130837,1 Average,14.5,170107,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $170 million. That figure was $200 million in DESP's case. Keane Group, Inc. (NYSE:FRAC) is the most popular stock in this table. On the other hand Oil States International, Inc. (NYSE:OIS) is the least popular one with only 10 bullish hedge fund positions. Despegar.com, Corp. (NYSE:DESP) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately DESP wasn't nearly as popular as these 15 stock and hedge funds that were betting on DESP were disappointed as the stock returned 14.8% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.