Tiger Cubs- those hedge fund managers who learned the tricks of the trade from Julian Robertson at Tiger Management– are really excited about travel websites. When we look at our database of 13F filings from the end of the third quarter, the top five owners of market leader Priceline.com Inc (NASDAQ:PCLN)’s stock are all Tiger Cub funds. The largest position- at 1.4 million shares, or nearly $900 million at that time- belonged to billionaire Stephen Mandel’s Lone Pine Capital (see Mandel’s stock picks). But interest on travel websites isn’t limited to Priceline; three of the top four hedge fund positions in Tripadvisor Inc (NASDAQ:TRIP) belonged to Tiger Cubs as well, with Lone Pine initiating a position of 5.7 million shares in the third quarter of 2012. Now Mandel and his team, according to a 13G filed with the SEC, have bought a total of 6.5 million shares of the stock, giving the fund 5% of the total shares outstanding.
Tripadvisor Inc was spun out from Expedia Inc (NASDAQ:EXPE) about a year ago to focus on providing reviews and other information about hotels, restaurants, and other locations (as opposed to Expedia’s focus on reservations). According to the company’s most recent 10-Q, revenue was up 18% in the third quarter compared to the same period in 2011. Net income was up 9%, though earnings per share were about flat as the result of an increase in share count. The market is pricing in high growth, with a trailing P/E of 32, and we would generally want to see better historical earnings growth for a stock at that multiple.
Two other Tiger Cubs with large holdings of Tripadvisor Inc at the beginning of October were Andreas Halvorsen of Viking Global (check out Halvorsen’s stock picks) and Philippe Laffont of Coatue Management, who actually had the $6 billion market cap company as one of his ten largest holdings (find more of Laffont’s favorite stocks). Luxor Capital, managed by Christian Leone, more than doubled its own stake in Tripadvisor last quarter and closed September with 6.4 million shares in its portfolio- just below the 5% threshold. See more stocks Leone likes. However, the most recent data shows that 16% of the outstanding shares are held short, so we know that a number of market players consider the stock overvalued.