Here’s What Makes Booking Holdings (BKNG) a Smart Investment Choice

LRT Capital Management, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. As of July 1st, 2022, LRT’s net exposure was approximately 77.74%, and its beta-adjusted exposure was 50.7%. The fund currently has 57 long positions with the top 10 accounting for approximately 40.7% of its total long exposure. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q2 2022 investor letter, LRT Capital Management mentioned Booking Holdings Inc. (NASDAQ:BKNG) and explained its insights for the company. Founded in 1996, Booking Holdings Inc. (NASDAQ:BKNG) is a Norwalk, Connecticut-based travel technology company with a $70.6 billion market capitalization. Booking Holdings Inc. (NASDAQ:BKNG) delivered a -27.53% return since the beginning of the year, while its 12-month returns are down by -15.90%. The stock closed at $1,738.79 per share on July 18, 2022.

Here is what LRT Capital Management has to say about Booking Holdings Inc. (NASDAQ:BKNG) in its Q2 2022 investor letter:

Booking Holdings was formerly Priceline.com but has changed its name to reflect that source of most of its revenue: Booking.com. Booking.com is the largest online travel agency (OTA) in the world, connecting travelers and hotels. The company has over 2.3 million properties in 220 countries on its site, along with photos, reviews and details about the amenities offered by each property. The accommodations offered range from hotels, motels, homes & apartments, hostels, and bed & breakfasts. The company occupies a dominant position in the travel booking funnel and collects revenue from hotel reservations booked through its site. Booking.com is particularly strong in Europe, where chain hotels are less dominant and smaller independent hotel rely on it to fill their rooms.

In addition to Booking.com, the company owns agoda.com, priceline.com, rentalcars.com, OpenTable and the KAYAK flight search engine. Hotel bookings account for most of the revenue, but the company also offers car rental reservations, flights, vacation packages, cruises, tours, airport taxis, etc.

The company benefits from economies of scale in its investments in technology, national advertising, and customer loyalty programs. The business also has enormous network effects, as consumers are most likely to use a booking platform with the most properties, broadest availability of reviews and strong customer service. This in turn drives hotels to make their room inventory available on booking.com, which drives most of the reservation traffic for many boutique hotels, thus reinforces the network effect. Of note, is that Booking.com operates two models: the agency model, where the company simply acts as an agent for a hotel and collects a fee, and the merchant model, under which Booking.com buys the room-night from the hotel, but then retains the ability to optimize the pricing on the room.

Also of note is the fact that the acquisition of Booking.com by Priceline.com is amongst the most successful and value creating M&A transactions of all time.”

Pixabay/Public Domain

Our calculations show that Booking Holdings Inc. (NASDAQ:BKNG) ranks 21st on our list of the 30 Most Popular Stocks Among Hedge Funds. Booking Holdings Inc. (NASDAQ:BKNG) was in 99 hedge fund portfolios at the end of the second quarter of 2022, compared to 92 funds in the previous quarter. Booking Holdings Inc. (NASDAQ:BKNG) delivered a -20.94% return in the past 3 months.

In April 2022, we also shared another hedge fund’s views on Booking Holdings Inc. (NASDAQ:BKNG) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

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

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