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Hedge Funds Aren’t Crazy About AerCap Holdings N.V. (AER) Anymore

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on AerCap Holdings N.V. (NYSE:AER).

AerCap Holdings N.V. (NYSE:AER) investors should pay attention to a decrease in support from the world’s most elite money managers recently. AER was in 22 hedge funds’ portfolios at the end of the third quarter of 2018. There were 24 hedge funds in our database with AER positions at the end of the previous quarter. Our calculations also showed that AER isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Boykin Curry EAGLE CAPITAL MANAGEMENT

Let’s take a glance at the key hedge fund action regarding AerCap Holdings N.V. (NYSE:AER).

What have hedge funds been doing with AerCap Holdings N.V. (NYSE:AER)?

Heading into the fourth quarter of 2018, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. By comparison, 33 hedge funds held shares or bullish call options in AER heading into this year. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

AER_dec2018

According to Insider Monkey’s hedge fund database, Boykin Curry’s Eagle Capital Management has the biggest position in AerCap Holdings N.V. (NYSE:AER), worth close to $463.1 million, comprising 1.6% of its total 13F portfolio. Sitting at the No. 2 spot is Greenlight Capital, led by David Einhorn, holding a $218 million position; 9.2% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Matthew Lindenbaum’s Basswood Capital and Wayne Cooperman’s Cobalt Capital Management.

Judging by the fact that AerCap Holdings N.V. (NYSE:AER) has experienced declining sentiment from hedge fund managers, it’s safe to say that there was a specific group of money managers who sold off their entire stakes last quarter. It’s worth mentioning that Leon Cooperman’s Omega Advisors dropped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $60.9 million in stock. Gary Claar’s fund, Claar Advisors, also sold off its stock, about $5.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as AerCap Holdings N.V. (NYSE:AER) but similarly valued. These stocks are Unum Group (NYSE:UNM), The Western Union Company (NYSE:WU), Alaska Air Group, Inc. (NYSE:ALK), and FLIR Systems, Inc. (NASDAQ:FLIR). This group of stocks’ market values resemble AER’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UNM 25 399209 1
WU 20 667767 -1
ALK 20 461660 1
FLIR 27 558828 1
Average 23 521866 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $522 million. That figure was $1.11 billion in AER’s case. FLIR Systems, Inc. (NASDAQ:FLIR) is the most popular stock in this table. On the other hand The Western Union Company (NYSE:WU) is the least popular one with only 20 bullish hedge fund positions. AerCap Holdings N.V. (NYSE:AER) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FLIR might be a better candidate to consider a long position.

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

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