With the latest round of 13F filings behind us, we are presenting a series of articles on hedge fund activity during the first quarter to shed some light on the prevailing sentiment among some of the best investors in the world. We track 730 different investment firms at Insider Monkey and know exactly how many of them hold positions in every U.S equity and how much money they have invested in them. In this article we’ll look at the stocks which have seen the most selling activity during the first quarter among the funds in our database, in terms of the dip in fund ownership of those stocks.
There was no specific industry in which hedge funds seemed to be particularly bearish against in terms of their top five sell-offs, unlike with the top five stocks hedge funds were buying during the first quarter, which were primarily tech stocks. A financial company, an energy company, a transportation company and a couple of tech companies in the internet and memory chip segments respectively, make up the list.
At the top of the list is American Airlines Group Inc (NASDAQ:AAL), in which 91 funds held an aggregate investment of $3.47 billion at the end of the first quarter. While that still ranked it as the 20th most popular stock, it was a steep fall from the 123 funds which had an aggregate $6.11 billion investment in the airline at the end of 2014. The capital invested in the stock was also the lowest of the companies in the top 35 of fund ownership. After a very strong year in which it returned over 115%, it appears the smart money has decided to take profits from the stock and move on to something else, as American Airlines Group Inc (NASDAQ:AAL) appears headed for some near-term headwinds, including rising fuel costs. While American Airlines has a fair P/E of 10.45, its price-to-book ratio is a very high 17.39. Among the funds to sell off their stakes in American Airlines Group Inc (NASDAQ:AAL) last quarter were David Tepper’s Appaloosa Management and Dan Loeb’s Third Point.
Ally Financial Inc (NYSE:ALLY) is next up, falling to 67 hedge funds with ownership positions, from 91 a quarter ago, while their invested capital declined to $4.98 billion from $6.29 billion. The biggest blow to Ally Financial Inc (NYSE:ALLY) during the first quarter and the one that likely sent many funds bolting for the exits (though it wasn’t totally unexpected) was the loss of General Motors Company (NYSE:GM) as a customer for lease subsidies. The automaker began solely using its internal finance company, GM Financial, for leases beginning April 1 of this year. That wiped out approximately 10% of Ally Financial Inc (NYSE:ALLY)’s lease originations according to 2014 numbers. Revenue also fell during the financial services company’s fourth quarter 2014 results, announced in late January, and its prospects for near-term growth appear limited. That uninspiring combination led funds like John Armitage’s Egerton Capital and Daniel Och’s OZ Management to close large positions in Ally, whose shares are down by 6% year-to-date.