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Did Hedge Funds Drop The Ball On Ctrip.com International, Ltd. (CTRP) ?

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 15 S&P 500 stocks among hedge funds at the end of September 2018 returned an average of 1% through March 15th whereas the S&P 500 Index ETF lost 2.2% during the same period. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Ctrip.com International, Ltd. (NASDAQ:CTRP) from the perspective of those elite funds.

Ctrip.com International, Ltd. (NASDAQ:CTRP) investors should pay attention to an increase in support from the world’s most elite money managers of late. Our calculations also showed that CTRP isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Eashwar Krishnan - Tybourne Capital

Let’s take a glance at the new hedge fund action regarding Ctrip.com International, Ltd. (NASDAQ:CTRP).

How have hedgies been trading Ctrip.com International, Ltd. (NASDAQ:CTRP)?

At the end of the fourth quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the second quarter of 2018. On the other hand, there were a total of 21 hedge funds with a bullish position in CTRP a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

CTRP

The largest stake in Ctrip.com International, Ltd. (NASDAQ:CTRP) was held by Fisher Asset Management, which reported holding $276.8 million worth of stock at the end of September. It was followed by Tybourne Capital Management with a $235.3 million position. Other investors bullish on the company included Silver Lake Partners, Kylin Management, and AQR Capital Management.

As one would reasonably expect, key money managers were leading the bulls’ herd. Ariose Capital, managed by Yi Xin, initiated the most valuable position in Ctrip.com International, Ltd. (NASDAQ:CTRP). Ariose Capital had $19.8 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $18.3 million position during the quarter. The other funds with new positions in the stock are George Soros’s Soros Fund Management, Steve Cohen’s Point72 Asset Management, and Glenn Russell Dubin’s Highbridge Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Ctrip.com International, Ltd. (NASDAQ:CTRP) but similarly valued. These stocks are ABIOMED, Inc. (NASDAQ:ABMD), Plains All American Pipeline, L.P. (NYSE:PAA), Ameriprise Financial, Inc. (NYSE:AMP), and Ulta Beauty, Inc. (NASDAQ:ULTA). All of these stocks’ market caps are similar to CTRP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ABMD 31 1301183 9
PAA 8 48965 -2
AMP 32 555326 -1
ULTA 42 1040887 2
Average 28.25 736590 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.25 hedge funds with bullish positions and the average amount invested in these stocks was $737 million. That figure was $772 million in CTRP’s case. Ulta Beauty, Inc. (NASDAQ:ULTA) is the most popular stock in this table. On the other hand Plains All American Pipeline, L.P. (NYSE:PAA) is the least popular one with only 8 bullish hedge fund positions. Ctrip.com International, Ltd. (NASDAQ:CTRP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. A handful of hedge funds were also right about betting on CTRP as the stock returned 54% and outperformed the market as well.

Disclosure: None. This article was originally published at Insider Monkey.

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