How Did Hedge Funds’ Delta Air Lines, Inc. (DAL) Bets Fare?

Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Delta Air Lines, Inc. (NYSE:DAL) at the end of the third quarter and determine whether the smart money was really smart about this stock.

Is Delta Air Lines, Inc. (NYSE:DAL) ready to rally soon? Hedge funds were turning bullish. The number of bullish hedge fund bets moved up by 1 in recent months. Delta Air Lines, Inc. (NYSE:DAL) was in 50 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 109. Our calculations also showed that DAL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to analyze the latest hedge fund action surrounding Delta Air Lines, Inc. (NYSE:DAL).

Do Hedge Funds Think DAL Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 50 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the second quarter of 2021. On the other hand, there were a total of 43 hedge funds with a bullish position in DAL a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Delta Air Lines, Inc. (NYSE:DAL). Citadel Investment Group has a $276.6 million call position in the stock, comprising 0.1% of its 13F portfolio. On Citadel Investment Group’s heels is Lansdowne Partners, managed by Suzi Nutton (CEO), which holds a $171.4 million position; the fund has 8.1% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions consist of Paul Reeder and Edward Shapiro’s PAR Capital Management, Noam Gottesman’s GLG Partners and Mike Masters’s Masters Capital Management. In terms of the portfolio weights assigned to each position Lansdowne Partners allocated the biggest weight to Delta Air Lines, Inc. (NYSE:DAL), around 8.08% of its 13F portfolio. Covalent Capital Partners is also relatively very bullish on the stock, designating 5.66 percent of its 13F equity portfolio to DAL.

As one would reasonably expect, key hedge funds have jumped into Delta Air Lines, Inc. (NYSE:DAL) headfirst. Renaissance Technologies, created the most valuable position in Delta Air Lines, Inc. (NYSE:DAL). Renaissance Technologies had $81.5 million invested in the company at the end of the quarter. Zach Schreiber’s Point State Capital also made a $29.8 million investment in the stock during the quarter. The other funds with brand new DAL positions are Louis Bacon’s Moore Global Investments, Louis Bacon’s Moore Global Investments, and Zilvinas Mecelis’s Covalis Capital.

Let’s check out hedge fund activity in other stocks similar to Delta Air Lines, Inc. (NYSE:DAL). These stocks are Skyworks Solutions Inc (NASDAQ:SWKS), Bill.com Holdings, Inc. (NYSE:BILL), Li Auto Inc. (NASDAQ:LI), Laboratory Corp. of America Holdings (NYSE:LH), UiPath Inc. (NYSE:PATH), AppLovin Corporation (NASDAQ:APP), and Weyerhaeuser Co. (NYSE:WY). This group of stocks’ market valuations are closest to DAL’s market valuation.

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As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $1889 million. That figure was $1218 million in DAL’s case. Bill.com Holdings, Inc. (NYSE:BILL) is the most popular stock in this table. On the other hand Li Auto Inc. (NASDAQ:LI) is the least popular one with only 20 bullish hedge fund positions. Delta Air Lines, Inc. (NYSE:DAL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DAL is 53.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, DAL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DAL were disappointed as the stock returned -6.9% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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