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This Metric Says You Are Smart to Sell Allegiant Travel Company (ALGT)

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Allegiant Travel Company (NASDAQ:ALGT) was in 9 hedge funds’ portfolio at the end of December. ALGT has experienced a decrease in hedge fund sentiment of late. There were 12 hedge funds in our database with ALGT holdings at the end of the previous quarter.

To most investors, hedge funds are seen as underperforming, old financial tools of the past. While there are greater than 8000 funds in operation at the moment, we choose to focus on the crème de la crème of this club, around 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total asset base, and by watching their best investments, we have deciphered a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy beat 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 topped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Allegiant Travel Company (NASDAQ:ALGT)

Equally as important, bullish insider trading sentiment is a second way to break down the marketplace. As the old adage goes: there are a number of incentives for a corporate insider to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this tactic if you know what to do (learn more here).

Keeping this in mind, we’re going to take a peek at the key action surrounding Allegiant Travel Company (NASDAQ:ALGT).

What have hedge funds been doing with Allegiant Travel Company (NASDAQ:ALGT)?

At year’s end, a total of 9 of the hedge funds we track were bullish in this stock, a change of -25% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their holdings meaningfully.

Of the funds we track, Jim Simons’s Renaissance Technologies had the most valuable position in Allegiant Travel Company (NASDAQ:ALGT), worth close to $66.8 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Diamond Hill Capital, managed by Ric Dillon, which held a $15.8 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers with similar optimism include D. E. Shaw’s D E Shaw, Andy Redleaf’s Whitebox Advisors and Ken Griffin’s Citadel Investment Group.

Seeing as Allegiant Travel Company (NASDAQ:ALGT) has faced a declination in interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedge funds that slashed their full holdings in Q4. Interestingly, Paul Reeder and Edward Shapiro’s PAR Capital Management cut the biggest position of the “upper crust” of funds we watch, comprising close to $28.5 million in stock., and Paul Tudor Jones of Tudor Investment Corp was right behind this move, as the fund dropped about $0.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 3 funds in Q4.

Insider trading activity in Allegiant Travel Company (NASDAQ:ALGT)

Bullish insider trading is at its handiest when the company in question has seen transactions within the past half-year. Over the last half-year time frame, Allegiant Travel Company (NASDAQ:ALGT) has seen zero unique insiders buying, and 7 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Allegiant Travel Company (NASDAQ:ALGT). These stocks are Republic Airways Holdings Inc. (NASDAQ:RJET), Alaska Air Group, Inc. (NYSE:ALK), SkyWest, Inc. (NASDAQ:SKYW), JetBlue Airways Corporation (NASDAQ:JBLU), and Gol Linhas Aereas Inteligentes SA (ADR) (NYSE:GOL). This group of stocks are in the regional airlines industry and their market caps match ALGT’s market cap.

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