Should You Avoid JetBlue Airways Corporation (JBLU)?

Looking for high-potential stocks? Just follow the big players within the hedge fund industry! This is not an ad, but let’s take a brief look at what statistics has to say about hedge funds’ stock picking abilities. The Standard and Poor’s 500 Index returned approximately 5.2% in the 12 months ending October 30, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a ‘winner’ by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of September 2014) generated a return of 9.5% during the same 12-month period, while 63% of these stock picks outperformed the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 16-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like JetBlue Airways Corporation (NASDAQ:JBLU).

Ian Schofield/

Ian Schofield/

JetBlue Airways Corporation (NASDAQ:JBLU) has experienced a decrease in activity from the world’s largest hedge funds of late.

In the financial world there are a lot of tools stock market investors put to use to value stocks. A duo of the most underrated tools are hedge fund and insider trading sentiment. Experts at hedge fund tracking site Insider Monkey have shown that, historically, those who follow the best picks of the best investment managers can outperform their index-focused peers by a superb amount (see the details here).

Now, we’re going to take a gander at the latest action regarding JetBlue Airways Corporation (NASDAQ:JBLU).

Hedge fund activity in JetBlue Airways Corporation (NASDAQ:JBLU)

At the end of the third quarter, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially.

Of the funds tracked by Insider Monkey, David Tepper’s Appaloosa Management LP had the number one position in JetBlue Airways Corporation (NASDAQ:JBLU), worth close to $115.8 million, amounting to 4% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, led by Jim Simons, holding a $96.2 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers with similar optimism comprise Robert Polak’s Anchor Bolt Capital, Anthony Bozza’s Lakewood Capital Management and Cliff Asness’s AQR Capital Management.

Because JetBlue Airways Corporation (NASDAQ:JBLU) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there was a specific group of hedge funds that elected to cut their positions entirely last quarter. At the top of the heap, Michael Hintze’s CQS Cayman LP said goodbye to the largest investment of all the hedgies tracked by Insider Monkey, totaling about $52.4 million in stock. Doug Gordon, Jon Hilsabeck and Don Jabro’s fund, Shellback Capital, also said goodbye to its stock, about $13.1 million worth. These moves are important to note, as total hedge fund interest dropped by 8 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to JetBlue Airways Corporation (NASDAQ:JBLU). We will take a look at SCANA Corporation (NYSE:SCG), Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), New York Community Bancorp, Inc. (NYSE:NYCB), and Verisign, Inc. (NASDAQ:VRSN). All of these stocks’ market caps are similar to JBLU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SCG 12 73593 -7
GMCR 16 466169 -13
NYCB 18 128407 0
VRSN 27 1972613 1

With the results demonstrated by Insider Monkey’s time-tested strategies, retail investors should always monitor hedge fund activity, and JetBlue Airways Corporation (NASDAQ:JBLU) applies perfectly to this mantra.