The smart money set has earned its nickname, at least where one investment is concerned.
News on Tuesday that Liberty Interactive bought about 4.8 million shares of travel website TripAdvisor from Barry Diller and the Diller-von Furstenberg Family Foundation at $62.50 apiece was a boon for several high-profile hedge funds, especially the most famous Tiger Cubs.
Investors looked favorably on the deal, which gives Liberty 22 percent of TripAdvisor’s equity and 57 percent of the voting rights, pushing up the stock between 7 percent and 8 percent in morning trading, to more than $41 per share. As a result, the stock is up more than 25 percent since the end of September alone and more than 33 percent since the beginning of November.
This recent, rapid run-up only boosts the gains of many of the largest hedge funds, especially the Tiger Management descendants who, at the end of the third quarter, reported owning huge stakes, in some cases initiated during the quarter.
As of September 30, TripAdvisor — a website known for its helpful customer reviews — was one of the 15 stocks with the highest percentage of shares owned by the 50 largest hedge fund companies, according to an analysis by Credit Suisse Quantitative Equity Research.
And Tiger Cubs were counted among three of the top five holders of the stock and four of the top nine holders. They include Andreas Halvorsen’s Viking Global Investors, which was the largest shareholder with more than 7.5 million shares, even after trimming its stake by about 16 percent.
The fourth largest shareholder was Philippe Laffont’s Coatue Management, which owned nearly six million shares after lifting its stake in the third quarter by about 45 percent. Stephen Mandel’s Lone Pine Capital quickly became the fifth largest holder after taking an initial stake of more than 5.7 million shares in the quarter.
Lee Ainslie’s Maverick Capital took an initial stake of more than 3.4 million shares, while Tiger Consumer Management, founded by Tiger Seed Patrick McCormack, bought two million shares, also a new position. (A Tiger Seed is a fund manager who received seed capital from Robertson but may or may not have worked for him directly.) The fourth largest new position — a relatively modest 690,000 shares — was bought by Discovery Capital Management, headed by Tiger Cub Robert Citrone.
Meanwhile, the second largest holder is Luxor Capital Management, founded by Goldman alum Christian Leone, which more than doubled its stake at the end of September to more than 6.4 million shares.
Hedge funds were not the only prescient investors in TripAdvisor. On Monday, Deutsche Bank analyst Lloyd Walmsley raised his rating on TripAdvisor’s stock to Buy from Hold, lifted its earnings estimates and raised the target price from $37 to $50. Great timing, huh?
In his report to clients, Walmsley cited the company’s favorable outlook for 2013. He thinks that increased competition between travel sites Expedia and Booking.com will benefit companies like TripAdvisor as the two companies boost marketing.
