Many investors, including Carl Icahn or Stan Druckenmiller, have been saying for a while now that the current market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the third quarter, many investors lost money due to unpredictable events such as the concerns over Valeant’s drug pricing policy that led to an overall drop among pharma stocks. Nevertheless, many of the stocks that tanked in the third quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Spirit Airlines Incorporated (NASDAQ:SAVE) changed recently.
Spirit Airlines Incorporated (NASDAQ:SAVE) investors should be aware of an increase in support from the world’s most elite money managers recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Eagle Materials, Inc. (NYSE:EXP), Prosperity Bancshares, Inc. (NYSE:PB), and Youku Tudou Inc (ADR) (NYSE:YOKU) to gather more data points.
In the eyes of most investors, hedge funds are seen as underperforming, old financial tools of years past. While there are greater than 8000 funds with their doors open at present, we choose to focus on the leaders of this club, approximately 700 funds. These investment experts have their hands on the majority of all hedge funds’ total asset base, and by watching their inimitable investments, Insider Monkey has spotted a few investment strategies that have historically beaten Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, let’s analyze the new action regarding Spirit Airlines Incorporated (NASDAQ:SAVE).
What does the smart money think about Spirit Airlines Incorporated (NASDAQ:SAVE)?
Heading into Q4, a total of 39 of the hedge funds tracked by Insider Monkey were long in this stock, a change of 26% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Spirit Airlines Incorporated (NASDAQ:SAVE). Citadel Investment Group has a $121.7 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish hedge fund manager is Samlyn Capital, managed by Robert Pohly, which held a $95.6 million position; the fund has 1.8% of its 13F portfolio invested in the stock. Remaining peers that are bullish contain Peter S. Park’s Park West Asset Management, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw.
As aggregate interest increased, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the biggest position in Spirit Airlines Incorporated (NASDAQ:SAVE). Millennium Management had $34.9 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $11.3 million investment in the stock during the quarter. The other funds with brand new SAVE positions are George McCabe’s Portolan Capital Management, Glenn Russell Dubin’s Highbridge Capital Management, and David Keidan’s Buckingham Capital Management.
Let’s go over hedge fund activity in other stocks similar to Spirit Airlines Incorporated (NASDAQ:SAVE). These stocks are Eagle Materials, Inc. (NYSE:EXP), Prosperity Bancshares, Inc. (NYSE:PB), Youku Tudou Inc (ADR) (NYSE:YOKU), and Techne Corporation (NASDAQ:TECH). This group of stocks’ market caps resemble SAVE’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $344 million. Eagle Materials, Inc. (NYSE:EXP) is the most popular stock in this table. On the other hand Techne Corporation (NASDAQ:TECH) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Spirit Airlines Incorporated (NASDAQ:SAVE) is more popular among hedge funds. Considering that hedge funds are fond of this stock, it may be a good idea to analyze it in detail and potentially include it in your portfolio.