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Priceline Group Gets New Position with Maverick Capital in 4Q14

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Maverick Capital and Priceline Group

Maverick Capital started a new position in Priceline Group (PCLN) in 4Q14. The fund bought 111,000 shares worth $126 million. According to the latest 13F filings for 4Q14, Priceline accounts for 1.98% of the hedge fund’s total portfolio.

Priceline Group (PCLN) has a 0.31% exposure to the SPDR S&P 500 (SPY) as well as the iShares Core S&P 500 ETF (IVV). The ETF tracks the performance of 500 publicly listed companies in the growth sector.

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Priceline’s growth trends

Priceline noted in its quarterly filing that the company has benefited from the consumer shift to online channels, especially the growing adoption of mobile platforms. Moreover, emerging markets such as Asia-Pacific and South America have seen increased growth in travel-creating opportunities for online travel companies such as Priceline.

For 2014, Priceline’s international business, most of which is generated by Booking.com, represented approximately 87% of total gross bookings.

With the 2014 acquisition of OpenTable, Priceline faces competition from other restaurant reservation providers such as La Fourchette, a European restaurant reservation business owned by TripAdvisor, and Yelp’s SeatMe service.

Priceline to buy Rocketmiles

Priceline plans to acquire travel startup Rocketmiles for $20 million. After the acquisition, Priceline’s customers will be able to book lodging directly through the Priceline network.

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Priceline shares jump 8.5% on strong 4Q14 results

For the fourth quarter of 2014, Priceline Group recorded bookings of $10.7 billion, up 17% year-over-year. Room nights booked grew by 24%, and rental car days grew by 16%.

Priceline’s revenue was up 19% year-over-year to $1.8 billion. GAAP (generally accepted accounting principles) net income was $452 million, or $8.56 per diluted share, compared to $378 million or $7.14 per diluted share in 4Q13.

2014 results

For 2014, Priceline’s gross bookings grew 28% to $50.3 billion, primarily driven by growth in the hotel inventory of Booking.com. Its revenues grew 24% to $8.4 billion. GAAP net income for the full year was $2.4 billion, or $45.67 per diluted share, compared to $1.9 billion or $36.11 per diluted share in 2013.

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Outlook for 1Q15

For 1Q15, Priceline expects its gross bookings to increase 2% to 9%. In addition, the company expects its revenues to increase 4% to 11% and GAAP earnings per share to be between $5.25 and $5.80. Priceline Group’s board of directors has authorized a $3 billion share buyback program.

Overview of Priceline 

Priceline (PCLN) is a leading player in the online travel services industry, with five primary brands and several ancillary brands. The following are its primary brands:

  • Booking.com
  • priceline.com
  • Agoda
  • KAYAK
  • rentalcars.com

Priceline offers accommodation reservations and helps consumers make reservations for rental cars, airline tickets, vacation packages, and cruises. Consumers can easily compare information for airline tickets, hotel accommodations, and rental car reservations from hundreds of travel websites through KAYAK’s websites and mobile applications.

Priceline generates revenues through travel commissions, reservation booking fees, and online advertising. The company has a 0.54% exposure to the iShares Russell 1000 Growth ETF (IWF). The company also comprises 2.64% of the Consumer Discretionary Select Sector SPDR ETF (XLY). XLY also includes Priceline’s online travel company peers TripAdvisor (TRIP) and Expedia (EXPE), with 0.41% and 0.40% exposures, respectively.

The next article in the series will explore Maverick Capital’s new position in Halliburton Company (HAL).

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