Baron Discovery Fund recently published its first-quarter commentary – a copy of which can be downloaded here. During the first quarter of 2021, the Baron Discovery Fund returned 7.5% (institutional shares). This was 2.59% higher than the Russell 2000 Growth Index, the Fund’s primary benchmark index. You should check out Baron Discovery Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q1 2021 Investor Letter, the fund highlighted a few stocks and Tripadvisor Inc. (NASDAQ:TRIP) is one of them. Tripadvisor Inc. (NASDAQ:TRIP) is an online travel company. In the last three months, Tripadvisor Inc. (NASDAQ:TRIP) stock gained 11% and on May 17th it had a closing price of $41. Here is what the fund said:
“Our top purchase this quarter was Tripadvisor, Inc., an online travel research company. In our view, Tripadvisor has built a strong following with over 460 million unique monthly visitors to its travel site and is well positioned to benefit as COVID-related travel restrictions ease. We became interested in the company as we saw management undertaking numerous positive changes that we believe are underappreciated by the broader market. First, the company is testing its newly announced Tripadvisor Plus subscription, which provides significant value to consumers by offering discounts and perks on Tripadvisor hotel bookings for only $99 per year. We have seen other companies, such as Amazon.com and DoorDash, have success with similar subscription products and we are bullish on subscription businesses generally as they drive high-quality recurring revenue and strong customer loyalty. From a financial perspective, what gets us excited about the Tripadvisor Plus program is that if it can convert a little over 2% of its 460 million monthly unique users into Tripadvisor Plus, the company can add approximately $1 billion in high-margin recurring subscription revenue. Ultimately, we think it will be able to achieve 5% to 10% penetration, or more, if the company can secure a Tripadvisor Plus credit card partnership. We are further encouraged by the addition of two new executives, Lindsay Nelson as Chief Experience and Brand Officer in charge of consumer-facing products, and Kanika Soni as Chief Commercial Officer leading B2B operations. Lastly, Tripadvisor implemented $250 million of fixed and discretionary cost reductions during the pandemic (most of which are permanent) that we believe can drive a faster-than-expected recovery to pre-pandemic profit levels when business recovers. Taken together, we believe these factors will drive an increase in the company’s profitability and valuation multiple.”
In Q4 2020, the number of bullish hedge fund positions on Tripadvisor Inc. (NASDAQ:TRIP) stock increased by about 41% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in TRIP’s growth potential. Our calculations showed that Tripadvisor Inc. (NASDAQ:TRIP) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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Disclosure: None. This article is originally published at Insider Monkey.