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Why Expedia Inc (EXPE) Should Be Bought On The Dip

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Expedia Inc (NASDAQ:EXPE) has had an awful 2013. To put it simply, it’s not Priceline, and investors aren’t treating it as such. But the following data may change your mind.

If you were to ask many market players, hedge funds are assumed to be bloated, old financial vehicles of a period lost to current times. Although there are more than 8,000 hedge funds in operation currently, Insider Monkey aim at the upper echelon of this club, about 525 funds. It is assumed that this group has its hands on the lion’s share of the hedge fund industry’s total assets, and by watching their best investments, we’ve come up with a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year 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 33 percentage points in 11 months (find the details here).

Equally as crucial, bullish insider trading activity is another way to look at the world of equities. There are many incentives for a corporate insider to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the market-beating potential of this strategy if investors know where to look (learn more here).

Keeping this in mind, let’s study the recent info about Expedia Inc (NASDAQ:EXPE).

How are hedge funds trading Expedia Inc (NASDAQ:EXPE)?

Heading into Q3, a total of 43 of the hedge funds we track were bullish in this stock, a change of 34% from the first quarter. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their holdings meaningfully.

Expedia Inc (NASDAQ:EXPE)According to our 13F database, Barry Rosenstein’s JANA Partners had the biggest position in Expedia Inc (NASDAQ:EXPE), worth close to $162.5 million, accounting for 2.3% of its total 13F portfolio. On JANA Partners’s heels is Steven Cohen of SAC Capital Advisors, with a $117.4 million position; 0.6% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include Dinakar Singh’s TPG-AXON Management LP, Patrick McCormack’s Tiger Consumer Management and Michael Karsch’s Karsch Capital Management.

Consequently, specific money managers have jumped into Expedia Inc (NASDAQ:EXPE) headfirst. JANA Partners, managed by Barry Rosenstein, initiated the largest position in Expedia Inc (NASDAQ:EXPE). JANA Partners had 162.5 million invested in the company at the end of the quarter. Steven Cohen’s SAC Capital Advisors also made a $117.4 million investment in the stock during the quarter. The following funds were also among the new EXPE investors: Dinakar Singh’s TPG-AXON Management LP, Patrick McCormack’s Tiger Consumer Management, and Michael Karsch’s Karsch Capital Management.

What have insiders been doing with Expedia Inc (NASDAQ:EXPE)?

Insider buying made by high-level executives is particularly usable when the company in question has experienced transactions within the past six months. Over the latest half-year time period, Expedia Inc (NASDAQ:EXPE) has experienced 1 unique insiders buying, and 1 insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to Expedia Inc (NASDAQ:EXPE). These stocks are Marriott International Inc (NYSE:MAR), Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT), Hyatt Hotels Corporation (NYSE:H), Wyndham Worldwide Corporation (NYSE:WYN), and InterContinental Hotels Group PLC (ADR) (NYSE:IHG). This group of stocks are in the lodging industry and their market caps are closest to EXPE’s market cap.

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