Is SPR Stock A Buy or Sell?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Spirit AeroSystems Holdings, Inc. (NYSE:SPR) changed recently.

Is SPR stock a buy or sell? The best stock pickers were getting more bullish. The number of bullish hedge fund positions moved up by 10 in recent months. Spirit AeroSystems Holdings, Inc. (NYSE:SPR) was in 41 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 50. Our calculations also showed that SPR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Jeffrey Tannenbaum of Fir Tree

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 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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. Now we’re going to go over the key hedge fund action encompassing Spirit AeroSystems Holdings, Inc. (NYSE:SPR).

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

At the end of December, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 32% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in SPR over the last 22 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

More specifically, Scopia Capital was the largest shareholder of Spirit AeroSystems Holdings, Inc. (NYSE:SPR), with a stake worth $223.9 million reported as of the end of December. Trailing Scopia Capital was OZ Management, which amassed a stake valued at $203.4 million. Citadel Investment Group, Two Sigma Advisors, and Two Creeks 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 Scopia Capital allocated the biggest weight to Spirit AeroSystems Holdings, Inc. (NYSE:SPR), around 28.33% of its 13F portfolio. Crestwood Capital Management is also relatively very bullish on the stock, dishing out 4.42 percent of its 13F equity portfolio to SPR.

Consequently, specific money managers were breaking ground themselves. Fir Tree, managed by Jeffrey Tannenbaum, established the most valuable position in Spirit AeroSystems Holdings, Inc. (NYSE:SPR). Fir Tree had $43 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $25.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Joseph Samuels’s Islet Management, Robert Pohly’s Samlyn Capital, and Renaissance Technologies.

Let’s now review hedge fund activity in other stocks similar to Spirit AeroSystems Holdings, Inc. (NYSE:SPR). These stocks are Vivint Smart Home, Inc. (NYSE:VVNT), Highwoods Properties Inc (NYSE:HIW), Cosan Limited (NYSE:CZZ), Hamilton Lane Incorporated (NASDAQ:HLNE), Carter’s, Inc. (NYSE:CRI), Proto Labs Inc (NYSE:PRLB), and Silgan Holdings Inc. (NASDAQ:SLGN). This group of stocks’ market caps are similar to SPR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VVNT 9 12200 4
HIW 21 181618 -4
CZZ 8 134889 -6
HLNE 14 57341 -2
CRI 25 316897 -1
PRLB 16 654308 0
SLGN 16 207764 1
Average 15.6 223574 -1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.6 hedge funds with bullish positions and the average amount invested in these stocks was $224 million. That figure was $996 million in SPR’s case. Carter’s, Inc. (NYSE:CRI) is the most popular stock in this table. On the other hand Cosan Limited (NYSE:CZZ) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Spirit AeroSystems Holdings, Inc. (NYSE:SPR) is more popular among hedge funds. Our overall hedge fund sentiment score for SPR is 84.6. 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 SPR as the stock returned 28.8% 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.

Follow Spirit Aerosystems Holdings Inc. (NYSE:SPR)

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