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If You Own Booking Holdings (BKNG) Stock, Should You Sell It Now?

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On July 14, 2020, Wedgewood Partners released its Q2 2020 Investor Letter, a copy of which you can download here. The Fund returned 27.13% for the second quarter of 2020. Meanwhile, the benchmark Russell 1000 Growth Index and the Russell 1000 Value Index gained 27.84% and 14.29%, respectively. You should check out Wedgewood Partners' top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Wedgewood Partners highlighted a few stocks and Booking Holdings Inc. (NASDAQ:BKNG) is one of them. Booking Holdings Inc. (NASDAQ:BKNG) offers online travel and related services. Year-to-date, Booking Holdings Inc. (NASDAQ:BKNG) stock lost 18.3% and on July 13th it had a closing price of $1,686.76. Here is what Wedgewood Partners said:

"After a holding period of several years, we decided to liquidate our position in Booking Holdings during the second quarter. We trimmed our position earlier this year, as the COVID-19 outbreak unfolded and we deployed proceeds into better opportunities elsewhere, but a combination of a significantly worsening fundamental picture and a recovery in the stock led us to sell our position entirely.

There has been no fundamental change to our view of the quality of the business model or the management team, and we wouldn’t be surprised if the stock found its way back into our portfolio again. However, the outlook for industry fundamentals quickly became much worse than we previously had anticipated, and we think normalization may be a multi-year process. Furthermore, comparing global travel and hospitality data to trends in Booking’s consensus estimates at the time we decided to sell our position, we believed even reduced expectations for the company’s results still were too high, likely by a considerable amount. In fact, shortly after our sale, Booking reported much worse than expected first quarter booking trends, coming in -30% below lowered expectations. In addition, the Company reported that April was even worse, with booked room nights collapsing -85% in the month.

Despite the superiority of the business model, and despite the fact that we expect Booking’s competitive position to emerge considerably stronger from this crisis, we believe there will be an extended period of adjustment before travel returns to anything like normal, meaning it will be a long time before we can call Booking a “growth company” again, and we can deploy the proceeds somewhere more attractive until then."

[caption id="attachment_568285" align="aligncenter" width="400"]

Safest Places to Visit in Mexico That Are Beautiful and Cheap
Safest Places to Visit in Mexico That Are Beautiful and Cheap

alphaspirit/Shutterstock.com[/caption]

In Q1 2020, the number of bullish hedge fund positions on Booking Holdings Inc. (NASDAQ:BKNG) stock increased by about 22% from the previous quarter (see the chart here), so a number of other hedge fund managers don't seem to agree with Booking Holdings' downside potential. Our calculations showed that Booking Holdings Inc. (NASDAQ:BKNG) is ranked #28 among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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