Is JetBlue Airways Corporation (JBLU) Going to Burn These Hedge Funds?

Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. With this in mind let’s see whether JetBlue Airways Corporation (NASDAQ:JBLU) makes for a good investment at the moment. We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.

JetBlue Airways Corporation (NASDAQ:JBLU) shareholders have witnessed an increase in hedge fund sentiment in recent months. JBLU was in 35 hedge funds’ portfolios at the end of December. There were 26 hedge funds in our database with JBLU holdings at the end of the previous quarter. Our calculations also showed that JBLU isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

In the financial world there are plenty of formulas investors employ to grade their holdings. A duo of the most under-the-radar formulas are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top fund managers can outperform the S&P 500 by a very impressive amount (see the details here).


Joel Greenblatt of Gotham Asset Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to go over the new hedge fund action surrounding JetBlue Airways Corporation (NASDAQ:JBLU).

What does smart money think about JetBlue Airways Corporation (NASDAQ:JBLU)?

At Q4’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards JBLU over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, PAR Capital Management was the largest shareholder of JetBlue Airways Corporation (NASDAQ:JBLU), with a stake worth $164.3 million reported as of the end of September. Trailing PAR Capital Management was Renaissance Technologies, which amassed a stake valued at $144.5 million. AQR Capital Management, NWI Management, and Candlestick Capital Management 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 PAR Capital Management allocated the biggest weight to JetBlue Airways Corporation (NASDAQ:JBLU), around 3.2% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, setting aside 2.79 percent of its 13F equity portfolio to JBLU.

Consequently, key money managers were breaking ground themselves. Candlestick Capital Management, managed by Jack Woodruff, assembled the largest position in JetBlue Airways Corporation (NASDAQ:JBLU). Candlestick Capital Management had $43.2 million invested in the company at the end of the quarter. Gregg Moskowitz’s Interval Partners also initiated a $42.7 million position during the quarter. The other funds with new positions in the stock are David Harding’s Winton Capital Management, Joel Greenblatt’s Gotham Asset Management, and Ali Motamed’s Invenomic Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to JetBlue Airways Corporation (NASDAQ:JBLU). These stocks are Smartsheet Inc. (NYSE:SMAR), First Industrial Realty Trust, Inc. (NYSE:FR), Macy’s, Inc. (NYSE:M), and Etsy Inc (NASDAQ:ETSY). 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
SMAR 44 1652600 -6
FR 19 204822 2
M 32 861446 0
ETSY 46 814287 -3
Average 35.25 883289 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.25 hedge funds with bullish positions and the average amount invested in these stocks was $883 million. That figure was $668 million in JBLU’s case. Etsy Inc (NASDAQ:ETSY) is the most popular stock in this table. On the other hand First Industrial Realty Trust, Inc. (NYSE:FR) is the least popular one with only 19 bullish hedge fund positions. JetBlue Airways Corporation (NASDAQ:JBLU) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately JBLU wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); JBLU investors were disappointed as the stock returned -39.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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