Dane Capital Management is bullish on Yatra Online Inc (NASDAQ:YTRA), a $248.78-million market cap consumer travel platform and online travel agent in India. In its Q4 investor letter, Dane Capital discussed its short thesis on YTRA. The fund believes that the Indian travel service provider has ‘excellent fundamentals’ and the company’s stock could deliver big gains in the coming months. In this article, we’ll take a look at Dane Capital’s comments on Yatra Online, and will discuss the company’s recent performance.
Here is what Dane Capital thinks about Yatra Online:
Yatra is the second largest OTA in India, the fastest growing large economy in the world. We believe the opportunity for the company is vast, and despite guidance of 35-40% annual revenue growth, we suspect that as personal incomes rise, the Indian travel market will get off the bottom of the “S-curve” and growth could accelerate dramatically.
In the short-term, we believe business is good, but the stock has acted poorly for several months. We believe this is almost solely due to a large seller. Filings indicate that Norwest Ventures, which held shares for 10 years, and probably was past its vintage, no longer holds any shares. We believe they distributed the shares to their LP, and suspect that they have been bleeding shares in recent months.
We suspect that when the selling dries up, the stock will stage a strong recovery based on excellent fundamentals and the company continuing to operate to plan. We believe this story is in its early stages and we will be rewarded for our patience.
Yatra Online Inc (NASDAQ:YTRA) is the second-largest online travel company in India. The company owns and operates Yatra.com and other associated platforms for leisure and business travelers. It provides information, pricing, availability, and booking facility for domestic and international air travel, domestic and international hotel bookings, holiday packages, buses, trains, in city activities, inter-city and point-to-point cabs, homestays and cruises. Yatra Online provides real-time bookings for more than 70,000 hotels in India and over 800,000 hotels around the world.
For three months ended December 31, Yatra Online reported a 40.8% year-over-year (YOY) increase in revenue to INR 3.4 billion. Net income for the quarter was INR 232.3 million. The company reported that standalone hotel room nights booked during the quarter was 0.5 million, up 37.8% YOY. Revenue less service cost from air ticketing rose to INR 1.4 billion, up 46% YOY. Gross air passengers booked were 2.3 million, representing YOY growth of 31.0%. Total gross bookings – air ticketing and hotels and packages – were INR 23.9 billion, representing a YOY growth of 44.8%.
Meanwhile, shares of Yatra Online Inc (NASDAQ:YTRA) are down nearly 4% so far this year. Over the last 12 months, the stock has dropped more than 22%. However, shares moved up nearly 8% over the last five trading days. YTRA received an average rating of Buy and an average price target of $14.17 from the analysts polled by FactSet. On Friday, the stock was closed at $7.20.
Besides Dane Capital Management, there are some investors that also see a value in Yatra Online. Among the hedge funds covered by Insider Monkey, six funds were holding positions in the company as of the end of September 2017.
Warren Buffett never mentions this but he is one of the first hedge fund managers who unlocked the secrets of successful stock market investing. He launched his hedge fund in 1956 with $105,100 in seed capital. Back then they weren’t called hedge funds, they were called “partnerships”. Warren Buffett took 25% of all returns in excess of 6 percent.
For example S&P 500 Index returned 43.4% in 1958. If Warren Buffett’s hedge fund didn’t generate any outperformance (i.e. secretly invested like a closet index fund), Warren Buffett would have pocketed a quarter of the 37.4% excess return. That would have been 9.35% in hedge fund “fees”.
Actually Warren Buffett failed to beat the S&P 500 Index in 1958, returned only 40.9% and pocketed 8.7 percentage of it as “fees”. His investors didn’t mind that he underperformed the market in 1958 because he beat the market by a large margin in 1957. That year Buffett’s hedge fund returned 10.4% and Buffett took only 1.1 percentage points of that as “fees”. S&P 500 Index lost 10.8% in 1957, so Buffett’s investors actually thrilled to beat the market by 20.1 percentage points in 1957.
Between 1957 and 1966 Warren Buffett’s hedge fund returned 23.5% annually after deducting Warren Buffett’s 5.5 percentage point annual fees. S&P 500 Index generated an average annual compounded return of only 9.2% during the same 10-year period. An investor who invested $10,000 in Warren Buffett’s hedge fund at the beginning of 1957 saw his capital turn into $103,000 before fees and $64,100 after fees (this means Warren Buffett made more than $36,000 in fees from this investor).
As you can guess, Warren Buffett’s #1 wealth building strategy is to generate high returns in the 20% to 30% range.
We see several investors trying to strike it rich in options market by risking their entire savings. You can get rich by returning 20% per year and compounding that for several years. Warren Buffett has been investing and compounding for at least 65 years.
So, how did Warren Buffett manage to generate high returns and beat the market?
In a free sample issue of our monthly newsletter we analyzed Warren Buffett’s stock picks covering the 1999-2017 period and identified the best performing stocks in Warren Buffett’s portfolio. This is basically a recipe to generate better returns than Warren Buffett is achieving himself.
You can enter your email below to get our FREE report. In the same report you can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12-24 months. We initially share this idea in October 2018 and the stock already returned more than 150%. We still like this investment.
Free Report Reveals
Warren Buffet's Secret Recipe
Our Price: $199FREE
We may use your email to send marketing emails about our services. Click here to read our privacy policy.
