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Hedge Funds Have Never Been Less Bullish On United Airlines Holdings (UAL)

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 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards United Airlines Holdings Inc (NASDAQ:UAL).

United Airlines Holdings Inc (NASDAQ:UAL) investors should be aware of a decrease in hedge fund sentiment recently. UAL was in 41 hedge funds’ portfolios at the end of March. There were 62 hedge funds in our database with UAL holdings at the end of the previous quarter. Our calculations also showed that UAL isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 44 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.

Brad Gerstner Altimeter Capital

Brad Gerstner of Altimeter Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the recent hedge fund action surrounding United Airlines Holdings Inc (NASDAQ:UAL).

What does smart money think about United Airlines Holdings Inc (NASDAQ:UAL)?

At the end of the first quarter, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of -34% from the previous quarter. By comparison, 49 hedge funds held shares or bullish call options in UAL a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Berkshire Hathaway held the most valuable stake in United Airlines Holdings Inc (NASDAQ:UAL), which was worth $699.1 million at the end of the third quarter. On the second spot was Altimeter Capital Management which amassed $340.5 million worth of shares. PAR Capital Management, Lansdowne Partners, and AQR Capital 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 PAR Capital Management allocated the biggest weight to United Airlines Holdings Inc (NASDAQ:UAL), around 10.55% of its 13F portfolio. Altimeter Capital Management is also relatively very bullish on the stock, dishing out 10.22 percent of its 13F equity portfolio to UAL.

Since United Airlines Holdings Inc (NASDAQ:UAL) has witnessed bearish sentiment from the smart money, it’s safe to say that there is a sect of hedgies that decided to sell off their full holdings heading into Q4. At the top of the heap, Leon Cooperman’s Omega Advisors dumped the largest position of the “upper crust” of funds followed by Insider Monkey, comprising close to $102.3 million in stock. Martin Taylor’s fund, Crake Asset Management, also dumped its stock, about $59.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 21 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to United Airlines Holdings Inc (NASDAQ:UAL). These stocks are VICI Properties Inc. (NYSE:VICI), SVB Financial Group (NASDAQ:SIVB), Vistra Energy Corp. (NYSE:VST), and CenterPoint Energy, Inc. (NYSE:CNP). This group of stocks’ market values match UAL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VICI 36 921752 -1
SIVB 30 383904 -5
VST 39 1440172 -10
CNP 32 560894 2
Average 34.25 826681 -3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 34.25 hedge funds with bullish positions and the average amount invested in these stocks was $827 million. That figure was $1909 million in UAL’s case. Vistra Energy Corp. (NYSE:VST) is the most popular stock in this table. On the other hand SVB Financial Group (NASDAQ:SIVB) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks United Airlines Holdings Inc (NASDAQ:UAL) is more popular among hedge funds. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately UAL wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on UAL were disappointed as the stock returned -11.1% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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