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How Hedge Funds Traded Booking Holdings Inc. (BKNG) Right After The Crash

Asma UL Husna

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Booking Holdings Inc. (NASDAQ:BKNG) based on that data.

Booking Holdings Inc. (NASDAQ:BKNG) was in 90 hedge funds' portfolios at the end of March. BKNG shareholders have witnessed a large increase in hedge fund sentiment of late. There were 74 hedge funds in our database with BKNG holdings at the end of the previous quarter. Our calculations also showed that BKNG is now among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 44 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_670980" align="aligncenter" width="397"] Gabriel Plotkin of Melvin Capital Management[/caption]

Gabriel Plotkin Melvin Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we asked astrophysicist Neil deGrasse Tyson about Tesla, Elon Musk, and his top stock picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's analyze the new hedge fund action regarding Booking Holdings Inc. (NASDAQ:BKNG).

How have hedgies been trading Booking Holdings Inc. (NASDAQ:BKNG)?

At Q1's end, a total of 90 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the fourth quarter of 2019. On the other hand, there were a total of 77 hedge funds with a bullish position in BKNG a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

The largest stake in Booking Holdings Inc. (NASDAQ:BKNG) was held by PAR Capital Management, which reported holding $432.4 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $421.2 million position. Other investors bullish on the company included Melvin Capital Management, Yacktman Asset Management, and SRS Investment Management. In terms of the portfolio weights assigned to each position PAR Capital Management allocated the biggest weight to Booking Holdings Inc. (NASDAQ:BKNG), around 18.36% of its 13F portfolio. RIT Capital Partners is also relatively very bullish on the stock, designating 17.62 percent of its 13F equity portfolio to BKNG.

As industrywide interest jumped, key hedge funds have been driving this bullishness. SRS Investment Management, managed by Karthik Sarma, assembled the biggest position in Booking Holdings Inc. (NASDAQ:BKNG). SRS Investment Management had $268.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also made a $100.6 million investment in the stock during the quarter. The other funds with brand new BKNG positions are Panayotis Takis Sparaggis's Alkeon Capital Management, Renaissance Technologies, and Ricky Sandler's Eminence Capital.

Let's go over hedge fund activity in other stocks similar to Booking Holdings Inc. (NASDAQ:BKNG). These stocks are Biogen Inc. (NASDAQ:BIIB), The Blackstone Group Inc. (NYSE:BX), ServiceNow Inc (NYSE:NOW), and Regeneron Pharmaceuticals Inc (NASDAQ:REGN). This group of stocks' market values are similar to BKNG's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BIIB,70,4497544,9 BX,49,1523046,2 NOW,85,3985632,10 REGN,42,838224,5 Average,61.5,2711112,6.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 61.5 hedge funds with bullish positions and the average amount invested in these stocks was $2711 million. That figure was $4915 million in BKNG's case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is the least popular one with only 42 bullish hedge fund positions. Compared to these stocks Booking Holdings Inc. (NASDAQ:BKNG) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on BKNG as the stock returned 21.3% so far in Q2 (through May 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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