5 Best New Stocks To Buy According to Hedge Funds

3. Airbnb, Inc. (NASDAQ:ABNB)

Number of Hedge Fund Holders: 58

Price as of October 20, 2021: $169.76

Airbnb, Inc. (NASDAQ:ABNB) is an online lodging marketplace with a presence of over 4 million hosts and has catered to over 1 billion guests since its inception. The San Francisco, California-based giant has changed the landscape of the lodging industry through its platform.

The stock price of Airbnb Inc. (NASDAQ:ABNB) has seen an increase of 22% since becoming public in December 2020 and has outperformed the S&P 500 Index, which has observed a rise of just over 17% during the same period.

Investment management firm, Worm Capital LLC mentioned Airbnb Inc. (NASDAQ:ABNB) in its Q2 2021 investor letter. Here’s what the fund said:

“Throughout the quarter, you may have noticed that we averaged into a significant position in Airbnb (ABNB). Though the stock has been a relative underperformer since its February highs, we are highly confident about the company’s prospects and its ability to generate meaningful compounded returns over time.

Some history: We have been following Airbnb’s journey for several years, long before the company went public earlier this year. (In fact, nine years ago, in November 2012, Eric profiled the company for Inc.: “Airbnb Is Changing Travel.”)

Whenever we underwrite a new investment, we look for a few key attributes that help us determine the potential long-term value of a business, as well as its risks. In particular, we focus on management (Are they founders? Do they have skin the game? Are they playing the long game?), addressable market size (How big is the opportunity?), its relative growth and creativity to expand (Are they constantly innovating to make the product better for their customers?), margin expansion (Where can we find operating leverage in the model?), its status in the industry (Are they the dominant player? Can they take market share from incumbents?), business risks (What are we missing? Are customers dissatisfied? What do employees say?) and probably a dozen more elements that are critical to our process. It’s only then do we take out the pencils do the valuation work …” (Click here to see the full text)