Was The Smart Money Right About Trip.com Group Limited (TCOM)?

We at Insider Monkey have gone over 873 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 June 30th. In this article, we look at what those funds think of Trip.com Group Limited (NASDAQ:TCOM) based on that data.

Trip.com Group Limited (NASDAQ:TCOM) investors should be aware of an increase in support from the world’s most elite money managers lately. Trip.com Group Limited (NASDAQ:TCOM) was in 41 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 67. Our calculations also showed that TCOM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a peek at the fresh hedge fund action regarding Trip.com Group Limited (NASDAQ:TCOM).

Do Hedge Funds Think TCOM Is A Good Stock To Buy Now?

At the end of June, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in TCOM over the last 24 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Ken Fisher’s Fisher Asset Management has the biggest position in Trip.com Group Limited (NASDAQ:TCOM), worth close to $329.3 million, accounting for 0.2% of its total 13F portfolio. On Fisher Asset Management’s heels is Platinum Asset Management, led by Kerr Neilson, holding a $272.1 million position; the fund has 6.3% of its 13F portfolio invested in the stock. Some other peers that hold long positions consist of Panayotis Takis Sparaggis’s Alkeon Capital Management, Richard S. Pzena’s Pzena Investment Management and GregardáHeje’s Kontiki Capital. In terms of the portfolio weights assigned to each position Kadensa Capital allocated the biggest weight to Trip.com Group Limited (NASDAQ:TCOM), around 33.79% of its 13F portfolio. Kontiki Capital is also relatively very bullish on the stock, earmarking 21.85 percent of its 13F equity portfolio to TCOM.

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Kadensa Capital, managed by Leung Chi Kit, created the most outsized position in Trip.com Group Limited (NASDAQ:TCOM). Kadensa Capital had $22.1 million invested in the company at the end of the quarter. John W. Rogers’s Ariel Investments also initiated a $20.9 million position during the quarter. The other funds with new positions in the stock are John Hurley’s Cavalry Asset Management, Steve Cohen’s Point72 Asset Management, and George Soros’s Soros Fund Management.

Let’s check out hedge fund activity in other stocks similar to Trip.com Group Limited (NASDAQ:TCOM). These stocks are MongoDB, Inc. (NASDAQ:MDB), CGI Inc. (NYSE:GIB), The Clorox Company (NYSE:CLX), Imperial Oil Limited (NYSE:IMO), Teradyne, Inc. (NASDAQ:TER), The Hartford Financial Services Group Inc (NYSE:HIG), and DISH Network Corp. (NASDAQ:DISH). This group of stocks’ market caps are closest to TCOM’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.4 hedge funds with bullish positions and the average amount invested in these stocks was $1243 million. That figure was $1998 million in TCOM’s case. DISH Network Corp. (NASDAQ:DISH) is the most popular stock in this table. On the other hand CGI Inc. (NYSE:GIB) 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. Our overall hedge fund sentiment score for TCOM is 64.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 through November 5th and beat the market again by 3.1 percentage points. Unfortunately TCOM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TCOM were disappointed as the stock returned -14.8% since the end of June (through 11/5) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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