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Did Hedge Funds Make The Right Call On Ryanair Holdings plc (RYAAY) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtRyanair Holdings plc (NASDAQ:RYAAY) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Ryanair Holdings plc (NASDAQ:RYAAY) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 22 hedge funds’ portfolios at the end of March. At the end of this article we will also compare RYAAY to other stocks including Arch Capital Group Ltd. (NASDAQ:ACGL), LINE Corporation (NYSE:LN), and Credicorp Ltd. (NYSE:BAP) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Crispin Odey of Odey Asset Management Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. With all of this in mind let’s analyze the fresh hedge fund action regarding Ryanair Holdings plc (NASDAQ:RYAAY).

What have hedge funds been doing with Ryanair Holdings plc (NASDAQ:RYAAY)?

At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. On the other hand, there were a total of 18 hedge funds with a bullish position in RYAAY a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Ryanair Holdings plc (NASDAQ:RYAAY) was held by Renaissance Technologies, which reported holding $175.3 million worth of stock at the end of September. It was followed by Immersion Capital with a $115.9 million position. Other investors bullish on the company included Polaris Capital Management, Woodson Capital Management, and Hosking Partners. In terms of the portfolio weights assigned to each position Teewinot Capital Advisers allocated the biggest weight to Ryanair Holdings plc (NASDAQ:RYAAY), around 16.16% of its 13F portfolio. Immersion Capital is also relatively very bullish on the stock, earmarking 15.81 percent of its 13F equity portfolio to RYAAY.

Due to the fact that Ryanair Holdings plc (NASDAQ:RYAAY) has experienced a decline in interest from the smart money, it’s safe to say that there exists a select few hedge funds who were dropping their entire stakes last quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest investment of all the hedgies watched by Insider Monkey, comprising an estimated $14.7 million in stock, and Andy Redleaf’s Whitebox Advisors was right behind this move, as the fund dumped about $3.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Ryanair Holdings plc (NASDAQ:RYAAY). These stocks are Arch Capital Group Ltd. (NASDAQ:ACGL), LINE Corporation (NYSE:LN), Credicorp Ltd. (NYSE:BAP), and Waters Corporation (NYSE:WAT). All of these stocks’ market caps are similar to RYAAY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ACGL 33 733577 10
LN 7 59060 -6
BAP 22 193610 0
WAT 25 337327 -2
Average 21.75 330894 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $331 million. That figure was $551 million in RYAAY’s case. Arch Capital Group Ltd. (NASDAQ:ACGL) is the most popular stock in this table. On the other hand LINE Corporation (NYSE:LN) is the least popular one with only 7 bullish hedge fund positions. Ryanair Holdings plc (NASDAQ:RYAAY) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on RYAAY, though not to the same extent, as the stock returned 25% during the second quarter and outperformed the market as well.

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Disclosure: None. This article was originally published at Insider Monkey.