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L1 Capital, an investment management firm, published its ‘L1 Capital International Fund’ third quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly net return of 3.7% was recorded by the fund in the second quarter of 2021, compared to the benchmark return of 3.9% You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
L1 Capital, in its Q3 2021 investor letter, mentioned Booking Holdings Inc. (NASDAQ: BKNG) and discussed its stance on the firm. Booking Holdings Inc. is a Norwalk, Connecticut-based travel company with a $97.9 billion market capitalization. TMO delivered a 7.22% return since the beginning of the year, while its 12-month returns are up by 14.74%. The stock closed at $2,405.01 per share on November 15, 2021.
Here is what L1 Capital has to say about Booking Holdings Inc. in its Q3 2021 investor letter:
"We reinvested the proceeds from our successful investment in Thermo Fisher in Booking Holdings (Booking). Booking was an investment in the Fund at Inception and was featured in our inaugural June 2019 Quarterly Report. The company owns the world’s largest online travel agent (OTA), Booking.com. To say the past 2.5 years has been volatile for Booking is a major understatement. Booking’s management has had to address the COVID-19-driven collapse in demand for travel accommodation, as well as to manage volatile demand as the world gradually recovers, interrupted by second and third waves of COVID-19 as variants arise.
Throughout these volatile market conditions, Booking’s management has executed against a consistent strategy, investing in its platform and network of accommodation providers, and expanded its associated services while improving efficiencies. We believe Booking will come out of the COVID-19 environment a stronger business, with less competition and consumers more predisposed to booking their travel accommodation online. Travel is recovering strongly as vaccination rates increase and COVID-19 related restrictions are lifted, and we expect Booking’s earnings and cashflow to also recover strongly over the coming years."
Based on our calculations, Booking Holdings Inc. (NASDAQ: BKNG) ranks 20th in our list of the 30 Most Popular Stocks Among Hedge Funds. BKNG was in 100 hedge fund portfolios at the end of the first half of 2021, compared to 103 funds in the previous quarter. Booking Holdings Inc. (NASDAQ: BKNG) delivered a 12.93% return in the past 3 months.
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 S&P 500 ETFs by 115 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 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.
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Disclosure: None. This article is originally published at Insider Monkey.