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Here’s What Hedge Funds Really Think About United Continental Holdings Inc (UAL)

Is United Continental Holdings Inc (NASDAQ:UAL) a buy here? Prominent investors are getting more optimistic. The number of long hedge fund positions improved by 6 lately. Our calculations also showed that UAL 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 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 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.

Warren Buffett and Billionaires

Let’s check out the recent hedge fund action surrounding United Continental Holdings Inc (NASDAQ:UAL).

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

Heading into the first quarter of 2019, a total of 49 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the second quarter of 2018. On the other hand, there were a total of 46 hedge funds with a bullish position in UAL a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

UAL

When looking at the institutional investors followed by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the most valuable position in United Continental Holdings Inc (NASDAQ:UAL), worth close to $1.8369 billion, amounting to 1% of its total 13F portfolio. On Berkshire Hathaway’s heels is Paul Reeder and Edward Shapiro of PAR Capital Management, with a $1.3082 billion position; 21.9% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include Brad Gerstner’s Altimeter Capital Management, Alex Snow’s Lansdowne Partners and Ric Dillon’s Diamond Hill Capital.

Consequently, some big names have been driving this bullishness. Ashler Capital, managed by Matt Simon (Citadel), established the largest position in United Continental Holdings Inc (NASDAQ:UAL). Ashler Capital had $45.9 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $22.7 million position during the quarter. The following funds were also among the new UAL investors: Mark Kingdon’s Kingdon Capital, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as United Continental Holdings Inc (NASDAQ:UAL) but similarly valued. We will take a look at SunTrust Banks, Inc. (NYSE:STI), Brown-Forman Corporation (NYSE:BF-B), Interactive Brokers Group, Inc. (IEX :IBKR), and Fortive Corporation (NYSE:FTV). This group of stocks’ market caps match UAL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STI 34 620370 12
BF 21 621082 -1
IBKR 21 910859 -8
FTV 30 405263 -5
Average 26.5 639394 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $639 million. That figure was $6716 million in UAL’s case. SunTrust Banks, Inc. (NYSE:STI) is the most popular stock in this table. On the other hand Brown-Forman Corporation (NYSE:BF-B) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks United Continental Holdings Inc (NASDAQ:UAL) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately UAL wasn’t in this group. Hedge funds that bet on UAL were disappointed as the stock lost 2.4% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.

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

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