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Were Hedge Funds Right About Tripadvisor Inc (TRIP)?

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·6 min read
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In this article we will analyze whether Tripadvisor Inc (NASDAQ:TRIP) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is Tripadvisor Inc (NASDAQ:TRIP) a buy right now? The smart money was becoming more confident. The number of bullish hedge fund positions improved by 12 recently. Tripadvisor Inc (NASDAQ:TRIP) was in 41 hedge funds' portfolios at the end of December. The all time high for this statistic is 43. Our calculations also showed that TRIP isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

According to most traders, hedge funds are viewed as slow, outdated financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, We hone in on the bigwigs of this club, approximately 850 funds. It is estimated that this group of investors handle the majority of the smart money's total capital, and by keeping an eye on their highest performing stock picks, Insider Monkey has found several investment strategies that have historically surpassed the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Gil Simon of SoMa Equity Partners
Gil Simon of SoMa Equity Partners

Gil Simon of SoMa Equity Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let's take a gander at the fresh hedge fund action surrounding Tripadvisor Inc (NASDAQ:TRIP).

Do Hedge Funds Think TRIP Is A Good Stock To Buy Now?

At fourth quarter's end, a total of 41 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 41% from the third quarter of 2020. By comparison, 39 hedge funds held shares or bullish call options in TRIP a year ago. So, let's find out 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 Tripadvisor Inc (NASDAQ:TRIP), which was worth $336.8 million at the end of the fourth quarter. On the second spot was Whale Rock Capital Management which amassed $155.3 million worth of shares. Renaissance Technologies, Polar Capital, and SoMa Equity Partners 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 Tripadvisor Inc (NASDAQ:TRIP), around 9.82% of its 13F portfolio. SoMa Equity Partners is also relatively very bullish on the stock, dishing out 2.09 percent of its 13F equity portfolio to TRIP.

As one would reasonably expect, some big names have jumped into Tripadvisor Inc (NASDAQ:TRIP) headfirst. Whale Rock Capital Management, managed by Alex Sacerdote, established the most valuable position in Tripadvisor Inc (NASDAQ:TRIP). Whale Rock Capital Management had $155.3 million invested in the company at the end of the quarter. David Fiszel's Honeycomb Asset Management also initiated a $22.8 million position during the quarter. The following funds were also among the new TRIP investors: Karthik Sarma's SRS Investment Management, Dmitry Balyasny's Balyasny Asset Management, and Chet Kapoor's Tenzing Global Investors.

Let's go over hedge fund activity in other stocks similar to Tripadvisor Inc (NASDAQ:TRIP). We will take a look at Hawaiian Electric Industries, Inc. (NYSE:HE), DCP Midstream LP (NYSE:DCP), Black Hills Corporation (NYSE:BKH), Wyndham Destinations, Inc. (NYSE:WYND), Velodyne Lidar, Inc. (NASDAQ:VLDR), Safehold Inc. (NYSE:SAFE), and Companhia Brasileira de Distribuição (NYSE:CBD). This group of stocks' market caps are closest to TRIP's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HE,18,169156,-1 DCP,3,12973,0 BKH,19,152822,-3 WYND,29,588842,0 VLDR,16,94202,3 SAFE,9,7069,2 CBD,6,19423,-1 Average,14.3,149212,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.3 hedge funds with bullish positions and the average amount invested in these stocks was $149 million. That figure was $1085 million in TRIP's case. Wyndham Destinations, Inc. (NYSE:WYND) is the most popular stock in this table. On the other hand DCP Midstream LP (NYSE:DCP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Tripadvisor Inc (NASDAQ:TRIP) is more popular among hedge funds. Our overall hedge fund sentiment score for TRIP is 88.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks returned 13.6% in 2021 through April 30th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on TRIP as the stock returned 63.8% since the end of December (through 4/30) 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.

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

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