We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like JetBlue Airways Corporation (NASDAQ:JBLU).
Is JetBlue Airways Corporation (NASDAQ:JBLU) a buy here? Hedge funds are taking a pessimistic view. The number of bullish hedge fund positions were cut by 4 lately. Our calculations also showed that JBLU 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Reeder of PAR Capital Management
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 fresh hedge fund action encompassing JetBlue Airways Corporation (NASDAQ:JBLU).
What does smart money think about JetBlue Airways Corporation (NASDAQ:JBLU)?
Heading into the fourth quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards JBLU 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.
The largest stake in JetBlue Airways Corporation (NASDAQ:JBLU) was held by PAR Capital Management, which reported holding $167.1 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $157.2 million position. Other investors bullish on the company included Millennium Management, AQR Capital Management, and NWI Management. In terms of the portfolio weights assigned to each position NWI Management allocated the biggest weight to JetBlue Airways Corporation (NASDAQ:JBLU), around 3.85% of its 13F portfolio. PAR Capital Management is also relatively very bullish on the stock, dishing out 2.89 percent of its 13F equity portfolio to JBLU.
Judging by the fact that JetBlue Airways Corporation (NASDAQ:JBLU) has experienced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of fund managers who were dropping their positions entirely by the end of the third quarter. At the top of the heap, Ross Margolies’s Stelliam Investment Management cut the biggest investment of all the hedgies monitored by Insider Monkey, comprising close to $14.2 million in stock. Andrew Kurita’s fund, Kettle Hill Capital Management, also sold off its stock, about $13.5 million worth. These transactions are important to note, as total hedge fund interest dropped by 4 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks similar to JetBlue Airways Corporation (NASDAQ:JBLU). We will take a look at Cimarex Energy Co (NYSE:XEC), Ultrapar Participacoes SA (NYSE:UGP), Prosperity Bancshares, Inc. (NYSE:PB), and Performance Food Group Company (NYSE:PFGC). This group of stocks’ market valuations resemble JBLU’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XEC | 31 | 926221 | 4 |
| UGP | 5 | 45121 | -2 |
| PB | 17 | 89818 | 1 |
| PFGC | 23 | 158474 | 4 |
| Average | 19 | 304909 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $305 million. That figure was $647 million in JBLU’s case. Cimarex Energy Co (NYSE:XEC) is the most popular stock in this table. On the other hand Ultrapar Participacoes SA (NYSE:UGP) is the least popular one with only 5 bullish hedge fund positions. JetBlue Airways Corporation (NASDAQ:JBLU) 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 JBLU as the stock returned 15% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
