Is SABR A Good Stock To Buy According To Hedge Funds?

Is Sabre Corporation (NASDAQ:SABR) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is SABR a good stock to buy? Sabre Corporation (NASDAQ:SABR) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 39. SABR has experienced a decrease in activity from the world’s largest hedge funds lately. There were 39 hedge funds in our database with SABR holdings at the end of June. Our calculations also showed that SABR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are dozens of methods investors can use to appraise publicly traded companies. Two of the best methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can outclass the S&P 500 by a very impressive amount (see the details here).

Emanuel J. Friedman

Emanuel Friedman of EJF Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to go over the key hedge fund action surrounding Sabre Corporation (NASDAQ:SABR).

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

At Q3’s end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from the second quarter of 2020. By comparison, 29 hedge funds held shares or bullish call options in SABR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

The largest stake in Sabre Corporation (NASDAQ:SABR) was held by King Street Capital, which reported holding $97.7 million worth of stock at the end of September. It was followed by PAR Capital Management with a $96.2 million position. Other investors bullish on the company included Yiheng Capital, Contrarius Investment Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position King Street Capital allocated the biggest weight to Sabre Corporation (NASDAQ:SABR), around 9.71% of its 13F portfolio. Yiheng Capital is also relatively very bullish on the stock, setting aside 5.38 percent of its 13F equity portfolio to SABR.

Because Sabre Corporation (NASDAQ:SABR) has witnessed bearish sentiment from the smart money, it’s safe to say that there were a few hedge funds who were dropping their positions entirely last quarter. Interestingly, Karthik Sarma’s SRS Investment Management sold off the biggest position of the “upper crust” of funds tracked by Insider Monkey, comprising about $60.7 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dropped its stock, about $18.6 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 8 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Sabre Corporation (NASDAQ:SABR) but similarly valued. We will take a look at Tootsie Roll Industries, Inc. (NYSE:TR), Karuna Therapeutics, Inc. (NASDAQ:KRTX), First Interstate Bancsystem Inc (NASDAQ:FIBK), Taubman Centers, Inc. (NYSE:TCO), Mr. Cooper Group Inc. (NASDAQ:COOP), EPR Properties (NYSE:EPR), and SpringWorks Therapeutics, Inc. (NASDAQ:SWTX). This group of stocks’ market valuations resemble SABR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TR 15 82763 -4
KRTX 15 168000 -1
FIBK 11 14085 -1
TCO 36 538236 -4
COOP 23 416248 -1
EPR 24 327724 1
SWTX 16 847645 1
Average 20 342100 -1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $342 million. That figure was $486 million in SABR’s case. Taubman Centers, Inc. (NYSE:TCO) is the most popular stock in this table. On the other hand First Interstate Bancsystem Inc (NASDAQ:FIBK) is the least popular one with only 11 bullish hedge fund positions. Sabre Corporation (NASDAQ:SABR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SABR is 60.8. 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. 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 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on SABR as the stock returned 76.7% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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