Expedia Inc (NASDAQ:EXPE) reported strong financial results for the second quarter after Thursday’s close, which has resulted in a more than 11% jump in the travel planning company’s stock today. The online travel company reported total revenue of $1.66 billion for the quarter, in-line with the consensus expectations of the Street and 11.2% higher than its revenue from the second quarter of 2014. Expedia Inc (NASDAQ:EXPE)’s corporate travel service, Egencia experienced a year-over-year revenue growth of just 1.9%, where as the OTS segments like Expedia.com and hotels.com, had revenues grow by 15.4%, while Trivago grew by 37.5% year-over-year. The travel company reported an adjusted EPS of $0.89 for the quarter, also surpassing the consensus estimate of $0.84 per share. Expedia Inc (NASDAQEXPE) reported an adjusted EBIDTA of $101.8 million for the quarter, 11.8% more than the same period a year ago. Expedia Inc (NASDAQ:EXPE)’s stock has now jumped by more than 38% year-to-date.
Hedge funds tracked by Insider Monkey were bullish on the stock of Expedia earlier this year. At the end of the first quarter, a total of 46 of the hedge funds tracked by Insider Monkey held long positions in the stock, with an aggregate investment of around $2.46 billion. There were 48 hedge funds with around a $1.72 billion investment in the stock at the end of December. Even though the number of hedge funds holding long positions in the stock was reduced during the first trimester, the overall investment by hedge funds went up by a whopping 43%, with the stock’s appreciation of 10% during the same period accounting for only a small portion of the increase. This shows that hedge funds were rather bullish on the stock.
We don’t just track the latest moves of hedge funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research which showed that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests, and easily beating the most popular large-cap picks of funds, which nonetheless get the majority of their collective capital. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic only the very best ideas of the best fund managers on your own? Since the beginning of forward testing in August 2012, the Insider Monkey small-cap strategy has outperformed the market every year, returning 123%, nearly two-times greater returns than the S&P 500 during the same period (see more details).
Likewise, other research (not our own) has shown insider purchases are also effective piggybacking methods for investors that can lead to greater returns. That’s why we believe investors should pay attention to what hedge funds and insiders are buying and keep them apprised of this information. Looking at Expedia Inc (NASDAQ:EXPE), there was no insider purchase of the shares during the first half of this year, but there were a few notable insider sales by top executives of the company. Notably, President and CEO at Expedia Inc (NASDAQ:EXPE), Dara Khosrowshahi sold around 50,000 shares this year, while Vice Chairman of the Board, Victor Kaufman sold around 79,200 shares in March and May respectively.
Taking this into account, let’s review the recent hedgie actions regarding Expedia Inc (NASDAQ:EXPE).
Hedge fund activity in Expedia Inc (NASDAQ:EXPE)
According to Insider Monkey’s hedge fund database, Paul Reeder and Edward Shapiro’s PAR Capital Management had the largest position in Expedia Inc (NASDAQ:EXPE), with around 3.7 million shares worth close to $344.5 million, accounting for 7.9% of its total 13F portfolio at the end of March. On PAR Capital Management’s heels was Tourbillon Capital Partners, managed by Jason Karp, which held around 3.4 million shares valued at $322.9 million; 8.3% of its 13F portfolio was allocated to the stock. Remaining hedgies with similar optimism included Robert Pitts‘ Steadfast Capital Management, Brad Gerstner’s Altimeter Capital Management, and Israel Englander‘s Millennium Management.
Despite the fact that some hedge funds opted to walk out of this stock during the first three months of the year, a few other hedge funds strengthened their position in the stock during that time, and they were right to do so, as the stock has gained around 20% since the end of March. Notably, Jason Karp’s fund had just 760,000 shares at the end of 2014, but increased its holding by a whopping 352% during the first quarter. Dmitry Balyasny’s Balyasny Asset Management and Ken Griffin’s Citadel Investment Group also increased their holdings in the stock, by 6,940% and 3,600% respectively during the first trimester. On the contrary, Daniel S. Och’s OZ Management dropped the largest investment in the stock, by selling all of its 2.4 million shares.
Hedge funds were rather bullish on Expedia Inc (NASDAQ:EXPE), as top hedge fund managers like Ken Griffin opted to significantly increase their positions in the stock during the first three months of 2015. Considering strong second quarter results and positive smart money sentiment, we recommend a long position in this stock at the moment.