The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Spirit Airlines, Inc. (NYSE:SAVE).
Spirit Airlines, Inc. (NYSE:SAVE) was in 24 hedge funds’ portfolios at the end of the third quarter of 2019. SAVE investors should be aware of a decrease in support from the world’s most elite money managers in recent months. There were 31 hedge funds in our database with SAVE positions at the end of the previous quarter. Our calculations also showed that SAVE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a peek at the new hedge fund action encompassing Spirit Airlines, Inc (NYSE:SAVE).
How are hedge funds trading Spirit Airlines, Inc (NYSE:SAVE)?
Heading into the fourth quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SAVE over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Polar Capital held the most valuable stake in Spirit Airlines, Inc (NYSE:SAVE), which was worth $35.5 million at the end of the third quarter. On the second spot was Mountain Lake Investment Management which amassed $18.2 million worth of shares. Teewinot Capital Advisers, Arlington Value Capital, and Royce & Associates 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 Mountain Lake Investment Management allocated the biggest weight to Spirit Airlines, Inc (NYSE:SAVE), around 9.18% of its portfolio. Teewinot Capital Advisers is also relatively very bullish on the stock, designating 6.17 percent of its 13F equity portfolio to SAVE.
Judging by the fact that Spirit Airlines, Inc (NYSE:SAVE) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there were a few fund managers that decided to sell off their entire stakes heading into Q4. It’s worth mentioning that Ross Margolies’s Stelliam Investment Management cut the largest stake of the 750 funds watched by Insider Monkey, totaling close to $21.2 million in stock. David Rosen’s fund, Rubric Capital Management, also dropped its stock, about $20.5 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 7 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Spirit Airlines, Inc (NYSE:SAVE) but similarly valued. We will take a look at Cloudera, Inc. (NYSE:CLDR), Columbia Property Trust Inc (NYSE:CXP), CNO Financial Group Inc (NYSE:CNO), and Integer Holdings Corporation (NYSE:ITGR). All of these stocks’ market caps match SAVE’s market cap.
|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 18 hedge funds with bullish positions and the average amount invested in these stocks was $273 million. That figure was $183 million in SAVE’s case. Cloudera, Inc. (NYSE:CLDR) is the most popular stock in this table. On the other hand Columbia Property Trust Inc (NYSE:CXP) is the least popular one with only 14 bullish hedge fund positions. Spirit Airlines, Inc (NYSE:SAVE) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on SAVE, though not to the same extent, as the stock returned 7.6% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.