Here’s Why The Brown Capital Management Mid Company Strategy Decided to Sell Expedia Group (EXPE)

Brown Capital Management, an investment management company, released its “The Brown Capital Management Mid Company Fund” first quarter 2024 investor letter. A copy of the letter can be downloaded here. The Mid Company Fund (Institutional shares) returned 5.21% in the quarter underperforming the 9.50% return for the Russell Midcap Growth Index. The strategy focuses on companies that offer mission-critical products and services that save time, lives, money, and headaches. In addition, check the fund’s top five holdings to know its best picks in 2024.

The Brown Capital Management Mid Company Fund highlighted stocks like Expedia Group, Inc. (NASDAQ:EXPE), in the first quarter 2024 investor letter. Expedia Group, Inc. (NASDAQ:EXPE) is an online travel company. The one-month return of Expedia Group, Inc. (NASDAQ:EXPE) was 16.39%, and its shares gained 18.57% of their value over the last 52 weeks. On June 24, 2024, Expedia Group, Inc. (NASDAQ:EXPE) stock closed at $128.16 per share with a market capitalization of $16.977 billion.

The Brown Capital Management Mid Company Fund stated the following regarding Expedia Group, Inc. (NASDAQ:EXPE) in its first quarter 2024 investor letter:

“Expedia Group, Inc. (NASDAQ:EXPE) is the largest online travel agency (OTA) in the U.S., offering a wide range of travel products, including flights, hotels, car rentals, cruises and vacation packages. Our original thesis was that increasing online travel penetration would provide solid growth and that significant margin expansion could be achievable. Since we first invested in Expedia eight years ago, there has indeed been a significant shift in travel spending toward online platforms, with penetration rates expanding considerably. While this aligns with our early expectations, the market for online travel is now much more penetrated, providing less opportunity for future growth. In addition, Expedia has been unable to meaningfully narrow the margin gap with its closest competitor, Booking Holdings, due to inconsistent execution and an unwieldy proliferation of brands within the company’s portfolio. Given the company’s more mature market position and its lagging margin performance, we decided to sell Expedia out of the Fund.”

An international traveler consulting the company’s app on their smartphone, illustrating their successful online marketplace.

Expedia Group, Inc. (NASDAQ:EXPE) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 62 hedge fund portfolios held Expedia Group, Inc. (NASDAQ:EXPE) at the end of the first quarter which was 65 in the previous quarter. Expedia Group, Inc.’s (NASDAQ:EXPE) revenue for the first quarter was $2.9 billion, which grew by 8% compared to last year. While we acknowledge the potential of Expedia Group, Inc. (NASDAQ:EXPE) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

We discussed Expedia Group, Inc. (NASDAQ:EXPE) in another article and shared the list of best feminist stocks to invest in. Artisan Select Equity Fund noted in the first quarter 2024 investor letter that Expedia Group, Inc. (NASDAQ: EXPE) shares dropped 9% during the quarter, partially due to a natural correction after a 47% surge in the prior quarter. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

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