Is trivago N.V. (TRVG) Going To Burn These Hedge Funds ?

We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of trivago N.V. (NASDAQ:TRVG) based on that data.

trivago N.V. (NASDAQ:TRVG) investors should pay attention to an increase in support from the world’s most elite money managers recently. TRVG was in 11 hedge funds’ portfolios at the end of the third quarter of 2019. There were 9 hedge funds in our database with TRVG positions at the end of the previous quarter. Our calculations also showed that TRVG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.

Paul Reeder PAR Capital Management

Paul Reeder of PAR Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a gander at the latest hedge fund action surrounding trivago N.V. (NASDAQ:TRVG).

Hedge fund activity in trivago N.V. (NASDAQ:TRVG)

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in TRVG a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Paul Reeder’s PAR Capital Management has the most valuable position in trivago N.V. (NASDAQ:TRVG), worth close to $86.4 million, comprising 1.5% of its total 13F portfolio. Sitting at the No. 2 spot is Brad Gerstner of Altimeter Capital Management, with a $21.5 million position; 0.5% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Joe Milano’s Greenhouse Funds, Ari Zweiman’s 683 Capital Partners and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Greenhouse Funds allocated the biggest weight to trivago N.V. (NASDAQ:TRVG), around 3.99% of its 13F portfolio. PAR Capital Management is also relatively very bullish on the stock, designating 1.5 percent of its 13F equity portfolio to TRVG.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Greenhouse Funds, managed by Joe Milano, created the largest call position in trivago N.V. (NASDAQ:TRVG). Greenhouse Funds had $2.1 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $0.2 million position during the quarter. The only other fund with a brand new TRVG position is Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as trivago N.V. (NASDAQ:TRVG) but similarly valued. We will take a look at Atrion Corporation (NASDAQ:ATRI), Masonite International Corp (NYSE:DOOR), Tanger Factory Outlet Centers Inc. (NYSE:SKT), and AAR Corp. (NYSE:AIR). This group of stocks’ market valuations resemble TRVG’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ATRI 16 96778 5
DOOR 17 286300 -2
SKT 18 80072 4
AIR 18 138846 -4
Average 17.25 150499 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $150 million. That figure was $145 million in TRVG’s case. Tanger Factory Outlet Centers Inc. (NYSE:SKT) is the most popular stock in this table. On the other hand Atrion Corporation (NASDAQ:ATRI) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks trivago N.V. (NASDAQ:TRVG) is even less popular than ATRI. Hedge funds dodged a bullet by taking a bearish stance towards TRVG. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately TRVG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TRVG investors were disappointed as the stock returned -43.3% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.

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