Although Greenhaven Road isn’t exactly a house hold name, it has been on an unquestionable hot streak. For its Q3 performance, the fund delivered an admirable +12% gross, bringing its year-to-date returns to around 38% net of fees. Given that Greenhaven Road recently released its Q3 investor letter, let’s dig deeper into the fund’s thesis on one of its top five positions, Tripadvisor Inc (Nasdaq:TRIP).

As for why the fund is long Tripadvisor Inc., valuation comes into play. Greenhaven Road writes, ‘we own TripAdvisor’s reservoir of more than 500 million reviews visited by 400+ million unique users per month, and an audience which has grown at a compounded annual rate of 18% over the last four years’ for under $5 billion net of cash.

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A large addressable market is also a reason, as the fund writes, ‘Annual worldwide travel spend is estimated at $1.3 trillion… The company is in an attractive market with secular tailwinds’. Greenhaven Road notes that although the company hasn’t yet monetized its traffic into megabucks, TripAdvisor ‘has transitioned business models from one where traffic was sent primarily to Priceline and Expedia.. to one where more traffic is booked directly from the TripAdvisor site’. Due to the transition, TripAdvisor hasn’t grown as fast as before (in fact revenue declined by 1% last year when it grew around 20% before). That said, the fund opines that if TripAdvisor fails to monetize traffic, ‘there could be numerous acquirers who are well-positioned to do so’. Perhaps more importantly, growth has picked up recently, fortunately, with sales growing 8% year-over-year last quarter, and Tripadvisor Inc. generating $320 million in operating cash flow for the first six months of the year. Basically Greenhaven Road feels that Tripadvisor has quality assets and is cheap given its under $5 billion valuation net of cash.

Shares of the stock are down 19% year-to-date and off 42% over the last twelve months.