Is SABR Stock A Buy or Sell?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Sabre Corporation (NASDAQ:SABR)? The smart money sentiment can provide an answer to this question.

Is SABR stock a buy or sell? Sabre Corporation (NASDAQ:SABR) has seen an increase in hedge fund interest in recent months. Sabre Corporation (NASDAQ:SABR) was in 46 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 39. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SABR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Reeder PAR Capital Management

Paul Reeder of PAR Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. 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 homepage (or at the end of this article). Now we’re going to take a peek at the key hedge fund action regarding Sabre Corporation (NASDAQ:SABR).

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

At Q4’s end, a total of 46 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 48% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in SABR over the last 22 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.

When looking at the institutional investors followed by Insider Monkey, Paul Reeder and Edward Shapiro’s PAR Capital Management has the most valuable position in Sabre Corporation (NASDAQ:SABR), worth close to $186.7 million, amounting to 5.4% of its total 13F portfolio. The second most bullish fund manager is Terry Smith of Fundsmith LLP, with a $163.7 million position; 0.5% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish encompass Jonathan Guo’s Yiheng Capital, Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management and Stephen Mildenhall’s Contrarius Investment Management. In terms of the portfolio weights assigned to each position Collaborative Holdings Management allocated the biggest weight to Sabre Corporation (NASDAQ:SABR), around 16.05% of its 13F portfolio. King Street Capital is also relatively very bullish on the stock, earmarking 10.31 percent of its 13F equity portfolio to SABR.

Now, key money managers were leading the bulls’ herd. Palestra Capital Management, managed by Andrew Immerman and Jeremy Schiffman, created the biggest position in Sabre Corporation (NASDAQ:SABR). Palestra Capital Management had $106.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $49.6 million position during the quarter. The other funds with new positions in the stock are Sheetal Sharma’s Collaborative Holdings Management, Len Kipp and Xavier Majic’s Maple Rock Capital, and Herbert Frazier’s Hill City Capital.

Let’s check out 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 Webster Financial Corporation (NYSE:WBS), Granite Real Estate Investment Trust (NYSE:GRP), Cerence Inc. (NASDAQ:CRNC), Braskem SA (NYSE:BAK), National Fuel Gas Company (NYSE:NFG), MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI), and Relay Therapeutics, Inc. (NASDAQ:RLAY). All of these stocks’ market caps are similar to SABR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WBS 26 394187 1
GRP 6 45457 0
CRNC 14 215273 2
BAK 8 10599 0
NFG 13 88868 -3
MTSI 24 283694 -4
RLAY 17 706347 -1
Average 15.4 249204 -0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $249 million. That figure was $1244 million in SABR’s case. Webster Financial Corporation (NYSE:WBS) is the most popular stock in this table. On the other hand Granite Real Estate Investment Trust (NYSE:GRP) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Sabre Corporation (NASDAQ:SABR) is more popular among hedge funds. Our overall hedge fund sentiment score for SABR is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on SABR as the stock returned 31.2% since the end of December (through 3/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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