Should Spirit Airlines Incorporated (NASDAQ:SAVE) investors track the following data?
Now, according to many of your fellow readers, hedge funds are viewed as delayed, outdated investment tools of an era lost to time. Although there are over 8,000 hedge funds trading today, this site focuses on the upper echelon of this club, close to 525 funds. It is widely held that this group has its hands on the majority of the hedge fund industry's total assets, and by paying attention to their highest quality stock picks, we've deciphered a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (find the details here).
Just as key, bullish insider trading activity is another way to analyze the financial markets. Obviously, there are a number of reasons for an executive to sell shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this strategy if you understand what to do (learn more here).
Keeping this in mind, let's examine the recent info about Spirit Airlines Incorporated (NASDAQ:SAVE).
At the end of the second quarter, a total of 20 of the hedge funds we track were bullish in this stock, a change of 33% from the previous quarter. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes significantly.
When using filings from the hedgies we track, PAR Capital Management, managed by Paul Reeder and Edward Shapiro, holds the largest position in Spirit Airlines Incorporated (NASDAQ:SAVE). PAR Capital Management has a $61.5 million position in the stock, comprising 1.7% of its 13F portfolio. Coming in second is D E Shaw, managed by D. E. Shaw, which held a $27.6 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds with similar optimism include Robert B. Gillam's McKinley Capital Management, Joel Greenblatt's Gotham Asset Management and John Overdeck and David Siegel's Two Sigma Advisors.
Now, certain money managers have been driving this bullishness. PAR Capital Management, managed by Paul ReederáandáEdward Shapiro, created the biggest position in Spirit Airlines Incorporated (NASDAQ:SAVE). PAR Capital Management had 61.5 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also made a $27.6 million investment in the stock during the quarter. The following funds were also among the new SAVE investors: Robert B. Gillam's McKinley Capital Management, Joel Greenblatt's Gotham Asset Management, and John Overdeck and David Siegel's Two Sigma Advisors.
Bullish insider trading is most useful when the primary stock in question has seen transactions within the past six months. Over the latest half-year time frame, Spirit Airlines Incorporated (NASDAQ:SAVE) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Using the results shown by our studies, average investors must always keep one eye on hedge fund and insider trading activity, and Spirit Airlines Incorporated (NASDAQ:SAVE) applies perfectly to this mantra.