Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the fourth quarter. Among them, Amazon and Netflix ranked among the top 30 picks and both lost around 20%. Facebook, which was the second most popular stock, lost 14% amid uncertainty regarding the interest rates and tech valuations. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Is Delta Air Lines, Inc. (NYSE:DAL) going to take off soon? The smart money is in a bullish mood. The number of long hedge fund positions went up by 1 in recent months. Our calculations also showed that DAL isn’t among the 30 most popular stocks among hedge funds.
In the 21st century investor’s toolkit there are numerous metrics market participants put to use to value publicly traded companies. Two of the most underrated metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the top money managers can trounce their index-focused peers by a very impressive amount (see the details here).
We’re going to review the fresh hedge fund action surrounding Delta Air Lines, Inc. (NYSE:DAL).
How are hedge funds trading Delta Air Lines, Inc. (NYSE:DAL)?
At Q3’s end, a total of 67 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the previous quarter. The graph below displays the number of hedge funds with bullish position in DAL over the last 13 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
The largest stake in Delta Air Lines, Inc. (NYSE:DAL) was held by Berkshire Hathaway, which reported holding $3789.9 million worth of stock at the end of September. It was followed by Lansdowne Partners with a $1523 million position. Other investors bullish on the company included PAR Capital Management, AQR Capital Management, and Cyrus Capital Partners.
As aggregate interest increased, some big names were breaking ground themselves. Impala Asset Management, managed by Robert Bishop, created the biggest position in Delta Air Lines, Inc. (NYSE:DAL). Impala Asset Management had $86.6 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $17.2 million investment in the stock during the quarter. The other funds with brand new DAL positions are Andrew Sandler’s Sandler Capital Management, and Glenn Russell Dubin’s Highbridge Capital Management.
Let’s go over hedge fund activity in other stocks similar to Delta Air Lines, Inc. (NYSE:DAL). These stocks are LyondellBasell Industries NV (NYSE:LYB), Canadian Natural Resources Limited (NYSE:CNQ), Kimberly-Clark Corporation (NYSE:KMB), and The Royal Bank of Scotland Group plc (NYSE:RBS). This group of stocks’ market values are similar to DAL’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $890 million. That figure was $7548 million in DAL’s case. LyondellBasell Industries NV (NYSE:LYB) is the most popular stock in this table. On the other hand The Royal Bank of Scotland Group plc (NYSE:RBS) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Delta Air Lines, Inc. (NYSE:DAL) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.