Did Hedge Funds Make The Right Call On Trip.com Group Limited (TCOM)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Trip.com Group Limited (NASDAQ:TCOM) and determine whether the smart money was really smart about this stock.

Hedge fund interest in Trip.com Group Limited (NASDAQ:TCOM) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Grifols SA (NASDAQ:GRFS), Genmab A/S (NASDAQ:GMAB), and Align Technology, Inc. (NASDAQ:ALGN) to gather more data points. Our calculations also showed that TCOM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

At the moment there are many metrics market participants can use to value their holdings. Some of the less utilized metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top money managers can trounce the S&P 500 by a superb margin (see the details here).

Clint Carlson of Carlson Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Now let’s take a peek at the new hedge fund action encompassing Trip.com Group Limited (NASDAQ:TCOM).

What have hedge funds been doing with Trip.com Group Limited (NASDAQ:TCOM)?

Heading into the second quarter of 2020, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in TCOM a year ago. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Is TCOM A Good Stock To Buy?

More specifically, Fisher Asset Management was the largest shareholder of Trip.com Group Limited (NASDAQ:TCOM), with a stake worth $254.7 million reported as of the end of September. Trailing Fisher Asset Management was Platinum Asset Management, which amassed a stake valued at $135.6 million. Renaissance Technologies, Serenity Capital, and Kontiki Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Kontiki Capital allocated the biggest weight to Trip.com Group Limited (NASDAQ:TCOM), around 18.38% of its 13F portfolio. Serenity Capital is also relatively very bullish on the stock, designating 15.3 percent of its 13F equity portfolio to TCOM.

Judging by the fact that Trip.com Group Limited (NASDAQ:TCOM) has witnessed falling interest from hedge fund managers, we can see that there exists a select few funds that elected to cut their entire stakes by the end of the first quarter. It’s worth mentioning that Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners cut the biggest investment of the 750 funds tracked by Insider Monkey, comprising about $19.7 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also said goodbye to its stock, about $14.1 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Trip.com Group Limited (NASDAQ:TCOM). We will take a look at Grifols SA (NASDAQ:GRFS), Genmab A/S (NASDAQ:GMAB), Align Technology, Inc. (NASDAQ:ALGN), and Teleflex Incorporated (NYSE:TFX). This group of stocks’ market values are similar to TCOM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GRFS 23 700219 2
GMAB 14 130319 2
ALGN 39 1396832 -1
TFX 32 766334 0
Average 27 748426 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $748 million. That figure was $967 million in TCOM’s case. Align Technology, Inc. (NASDAQ:ALGN) is the most popular stock in this table. On the other hand Genmab A/S (NASDAQ:GMAB) is the least popular one with only 14 bullish hedge fund positions. Trip.com Group Limited (NASDAQ:TCOM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately TCOM wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TCOM were disappointed as the stock returned 10.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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