Is Sun Country Airlines Holdings, Inc. (SNCY) Going to Burn These Hedge Funds?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY) in this article.

Is Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY) a buy right now? Money managers were turning bullish. The number of bullish hedge fund bets moved up by 20 in recent months. Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY) was in 20 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that SNCY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the eyes of most shareholders, hedge funds are perceived as slow, outdated financial tools of yesteryear. While there are more than 8000 funds in operation at present, Our experts choose to focus on the aristocrats of this club, about 850 funds. These money managers direct the majority of the smart money’s total asset base, and by following their top equity investments, Insider Monkey has formulated many investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Paul Reeder PAR Capital Management

Paul Reeder of PAR Capital Management

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

At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20 from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SNCY over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY) was held by PAR Capital Management, which reported holding $72.2 million worth of stock at the end of December. It was followed by Driehaus Capital with a $23.1 million position. Other investors bullish on the company included Citadel Investment Group, Zimmer Partners, and Royce & Associates. In terms of the portfolio weights assigned to each position PAR Capital Management allocated the biggest weight to Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY), around 1.67% of its 13F portfolio. Mountain Lake Investment Management is also relatively very bullish on the stock, dishing out 1.02 percent of its 13F equity portfolio to SNCY.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. PAR Capital Management, managed by Paul Reeder and Edward Shapiro, assembled the largest position in Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY). PAR Capital Management had $72.2 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also made a $23.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Stuart J. Zimmer’s Zimmer Partners, and Chuck Royce’s Royce & Associates.

Let’s now review hedge fund activity in other stocks similar to Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY). These stocks are InterDigital, Inc. (NASDAQ:IDCC), Service Properties Trust (NASDAQ:SVC), Infinera Corp. (NASDAQ:INFN), Apollo Commercial Real Est. Finance Inc (NYSE:ARI), TechTarget Inc (NASDAQ:TTGT), Dicerna Pharmaceuticals Inc (NASDAQ:DRNA), and Progress Software Corporation (NASDAQ:PRGS). All of these stocks’ market caps are closest to SNCY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IDCC 15 273221 -3
SVC 18 153253 -2
INFN 20 372720 -1
ARI 11 44247 -7
TTGT 17 129279 -1
DRNA 27 294797 -2
PRGS 18 154642 2
Average 18 203166 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $173 million in SNCY’s case. Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) is the most popular stock in this table. On the other hand Apollo Commercial Real Est. Finance Inc (NYSE:ARI) is the least popular one with only 11 bullish hedge fund positions. Sun Country Airlines Holdings, Inc. (NASDAQ:SNCY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SNCY is 55. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately SNCY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SNCY were disappointed as the stock returned -6% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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