The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards Fly Leasing Ltd (NYSE:FLY).
Fly Leasing Ltd (NYSE:FLY) investors should pay attention to a decrease in activity from the world’s largest hedge funds of late. Fly Leasing Ltd (NYSE:FLY) was in 7 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 14. There were 10 hedge funds in our database with FLY holdings at the end of June. Our calculations also showed that FLY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. You can subscribe to our free daily newsletter on our website. Now let’s go over the recent hedge fund action encompassing Fly Leasing Ltd (NYSE:FLY).
How are hedge funds trading Fly Leasing Ltd (NYSE:FLY)?
At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -30% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in FLY a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Mangrove Partners was the largest shareholder of Fly Leasing Ltd (NYSE:FLY), with a stake worth $5.2 million reported as of the end of September. Trailing Mangrove Partners was D E Shaw, which amassed a stake valued at $2.6 million. Arrowstreet Capital, Marshall Wace LLP, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Mangrove Partners allocated the biggest weight to Fly Leasing Ltd (NYSE:FLY), around 0.65% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to FLY.
Seeing as Fly Leasing Ltd (NYSE:FLY) has faced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few money managers that elected to cut their full holdings last quarter. At the top of the heap, Noam Gottesman’s GLG Partners dropped the largest position of the “upper crust” of funds tracked by Insider Monkey, valued at close to $1.6 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $0.8 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Fly Leasing Ltd (NYSE:FLY). We will take a look at Ruhnn Holding Limited (NASDAQ:RUHN), GreenPower Motor Company Inc. (NASDAQ:GP), Matrix Service Co (NASDAQ:MTRX), NN, Inc. (NASDAQ:NNBR), Retractable Technologies, Inc. (NYSE:RVP), Tuscan Holdings Corp. II (NASDAQ:THCA), and Regis Corporation (NYSE:RGS). This group of stocks’ market valuations are similar to FLY’s market valuation.
|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 7 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $13 million in FLY’s case. Matrix Service Co (NASDAQ:MTRX) is the most popular stock in this table. On the other hand GreenPower Motor Company Inc. (NASDAQ:GP) is the least popular one with only 2 bullish hedge fund positions. Fly Leasing Ltd (NYSE:FLY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FLY is 37.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on FLY as the stock returned 16.8% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.