3. Booking Holdings Inc (NASDAQ:BKNG)
Number of Hedge Fund Investors: 81
Goldman Sachs recently recommended a few stocks for those who are worried about high valuations. Goldman Sachs analysts believe these stocks have “reasonable” valuations.
Booking Holdings Inc (NASDAQ:BKNG) was one of these stocks. Goldman Sachs said these stocks rank in the top 20% of their sectors based on growth, “but do not rank in either the top 40% or bottom 20% of their sectors on Value.”
L1 Capital International Fund made the following comment about Booking Holdings Inc. (NASDAQ:BKNG) in its Q3 2023 investor letter:
“Following significant under-performance, some high-quality businesses in these sectors are now becoming more attractive from a valuation perspective – in our language they are now getting warmer on our Bench of potential investments.
Our ‘all-weather’ portfolio centred around our unique definition of ‘quality’ delivered strong performance in the September quarter. Three companies positively contributed over 0.5% (in Australian dollars) to the Fund’s returns for the quarter (Booking Holdings Inc. (NASDAQ:BKNG), Intuit and Natural Resource Partners, in alphabetical order), and another three companies almost reached this level of positive contribution. No companies detracted from the Portfolio’s returns by 0.5% or more.
As part of our travels during the quarter (see page 6) we had the opportunity to meet with management of both Booking Holdings and Intuit. We continue to view both companies as exceptionally well managed.
Booking Holdings, the world’s leading online travel agency, continues to benefit from a strong global travel environment with particular strength in Europe, Booking Holdings’ core market. Fears of peak ‘revenge travel’ following COVID-19 lockdowns have been misplaced in our view. We assess current travel volumes to be only slightly elevated compared to pre-COVID-19 trends, with some regions, particularly outbound travel from China, still relatively depressed. Anyone who has travelled anywhere recently will be nodding when we say hotel rates have increased meaningfully in recent times. Accommodation providers are generally doing quite well, but the increased hotel rates have been necessary to offset inflation in costs such as employee salaries and additional cleaning services. As Booking Holdings ‘clips the ticket’ of accommodation spend, the company has benefitted from increased average daily hotel rates. Importantly, Booking Holdings continues to invest in its business, improving the reach, quality and range of services it provides, resulting in gains in market share and an extension of its industry leadership position. Booking Holdings is now more fairly valued by the market, but still provides attractive base case risk-adjusted returns and remains one of the larger investments in the Fund.”
