Is Tripadvisor Inc (NASDAQ:TRIP) the right investment to pursue these days? Hedge funds are turning less bullish. The number of bullish hedge fund bets decreased by 5 recently.
To most stock holders, hedge funds are assumed to be underperforming, old investment tools of yesteryear. While there are greater than 8000 funds in operation at present, we hone in on the aristocrats of this group, around 450 funds. It is widely believed that this group controls most of the hedge fund industry's total asset base, and by paying attention to their highest performing stock picks, we have found a number of investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Just as key, optimistic insider trading activity is a second way to break down the marketplace. There are many incentives for a corporate insider to sell shares of his or her company, but only one, very clear reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this method if you understand what to do (learn more here).
Consequently, we're going to take a gander at the recent action encompassing Tripadvisor Inc (NASDAQ:TRIP).
Heading into 2013, a total of 38 of the hedge funds we track held long positions in this stock, a change of -12% from the third quarter. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings meaningfully.
Of the funds we track, Stephen Mandel's Lone Pine Capital had the biggest position in Tripadvisor Inc (NASDAQ:TRIP), worth close to $275 million, accounting for 1.7% of its total 13F portfolio. On Lone Pine Capital's heels is Pennant Capital Management, managed by Alan Fournier, which held a $187 million position; the fund has 3.9% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Philippe Laffont's Coatue Management, Paul ReederáandáEdward Shapiro's PAR Capital Management and Barry Rosenstein's JANA Partners.
Due to the fact that Tripadvisor Inc (NASDAQ:TRIP) has faced a declination in interest from hedge fund managers, we can see that there is a sect of hedgies that elected to cut their entire stakes in Q4. Intriguingly, Andreas Halvorsen's Viking Global sold off the biggest stake of the "upper crust" of funds we key on, valued at an estimated $248 million in stock., and John Griffin of Blue Ridge Capital was right behind this move, as the fund cut about $92 million worth. These moves are interesting, as total hedge fund interest was cut by 5 funds in Q4.
Insider purchases made by high-level executives is most useful when the primary stock in question has seen transactions within the past 180 days. Over the latest 180-day time period, Tripadvisor Inc (NASDAQ:TRIP) has seen 1 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
With the results shown by Insider Monkey's studies, retail investors must always watch hedge fund and insider trading activity, and Tripadvisor Inc (NASDAQ:TRIP) shareholders fit into this picture quite nicely.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.