"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. That's why we believe it would be worthwhile to take a look at the hedge fund sentiment on Expedia Group, Inc. (NASDAQ:EXPE) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Expedia Group, Inc. (NASDAQ:EXPE) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 33 hedge funds' portfolios at the end of the third quarter of 2019. At the end of this article we will also compare EXPE to other stocks including Fifth Third Bancorp (NASDAQ:FITB), Fox Corporation (NASDAQ:FOX), and Fox Corporation (NASDAQ:FOXA) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_747408" align="aligncenter" width="1613"] Paul Reeder of PAR Capital 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. We're going to take a look at the latest hedge fund action regarding Expedia Group, Inc. (NASDAQ:EXPE).
How have hedgies been trading Expedia Group, Inc. (NASDAQ:EXPE)?
At the end of the third quarter, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2019. On the other hand, there were a total of 37 hedge funds with a bullish position in EXPE 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 Expedia Group, Inc. (NASDAQ:EXPE), which was worth $1281.5 million at the end of the third quarter. On the second spot was Altimeter Capital Management which amassed $457 million worth of shares. Renaissance Technologies, GLG Partners, and Polar Capital 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 Expedia Group, Inc. (NASDAQ:EXPE), around 22.19% of its portfolio. Altimeter Capital Management is also relatively very bullish on the stock, setting aside 11.15 percent of its 13F equity portfolio to EXPE.
Judging by the fact that Expedia Group, Inc. (NASDAQ:EXPE) has witnessed declining sentiment from hedge fund managers, it's easy to see that there exists a select few fund managers who were dropping their full holdings heading into Q4. At the top of the heap, Steve Cohen's Point72 Asset Management sold off the largest position of the "upper crust" of funds followed by Insider Monkey, totaling an estimated $39.7 million in stock. Louis Bacon's fund, Moore Global Investments, also dropped its stock, about $13.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Expedia Group, Inc. (NASDAQ:EXPE) but similarly valued. We will take a look at Fifth Third Bancorp (NASDAQ:FITB), Fox Corporation (NASDAQ:FOX), Fox Corporation (NASDAQ:FOXA), and Rogers Communications Inc. (NYSE:RCI). This group of stocks' market caps are closest to EXPE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FITB,34,1027583,5 FOX,27,849332,-3 FOXA,48,2457821,-12 RCI,21,440152,7 Average,32.5,1193722,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $1194 million. That figure was $2622 million in EXPE's case. Fox Corporation (NASDAQ:FOXA) is the most popular stock in this table. On the other hand Rogers Communications Inc. (NYSE:RCI) is the least popular one with only 21 bullish hedge fund positions. Expedia Group, Inc. (NASDAQ:EXPE) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately EXPE wasn't nearly as popular as these 20 stocks and hedge funds that were betting on EXPE were disappointed as the stock returned -24.1% during the fourth quarter (through the end of November) 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.