Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
The Boeing Company (NYSE:BA) investors should pay attention to a decrease in hedge fund interest lately. BA was in 35 hedge funds’ portfolios at the end of September. There were 44 hedge funds in our database with BA positions at the end of the previous quarter. At the end of this article we will also compare BA to other stocks including 3M Co (NYSE:MMM), United Parcel Service, Inc. (NYSE:UPS), and Schlumberger Limited. (NYSE:SLB) to get a better sense of its popularity.
In the financial world there are many signals market participants use to value their stock investments. A duo of the most innovative signals is composed of hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best money managers can beat the broader indices by a very impressive amount (see the details here).
With all of this in mind, we’re going to analyze the new action surrounding The Boeing Company (NYSE:BA).
How are hedge funds trading The Boeing Company (NYSE:BA)?
At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% 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 boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Phill Gross and Robert Atchinson’s Adage Capital Management has the number one position in The Boeing Company (NYSE:BA), worth close to $248.7 million, amounting to 0.7% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which holds a $152.7 million position; 0.1% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish contain Cliff Asness’s AQR Capital Management, Bill Miller’s Legg Mason Capital Management and D. E. Shaw’s D E Shaw.
Judging by the fact that The Boeing Company (NYSE:BA) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedge funds who were dropping their entire stakes heading into Q4. Intriguingly, Doug Silverman and Alexander Klabin’s Senator Investment Group said goodbye to the biggest position of all the hedgies monitored by Insider Monkey, totaling close to $208,1 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also cut its stock, about $31,1 million worth. These moves are interesting, as aggregate hedge fund interest fell by 9 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to The Boeing Company (NYSE:BA). We will take a look at 3M Co (NYSE:MMM), United Parcel Service, Inc. (NYSE:UPS), Schlumberger Limited. (NYSE:SLB), and Kraft Heinz Co (NASDAQ:KHC). All of these stocks’ market caps match BA’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 50 hedge funds with bullish positions and the average amount invested in these stocks was $8237 million. That figure was $1177 million in BA’s case. Schlumberger Limited. (NYSE:SLB) is the most popular stock in this table. On the other hand United Parcel Service, Inc. (NYSE:UPS) is the least popular one with only 40 bullish hedge fund positions. Compared to these stocks The Boeing Company (NYSE:BA) is even less popular than UPS. To comprehend why the smart money isn’t behind this stock, further research is needed. This doesn’t necessarily mean this stock is not worth buying; it is possible that investors find it overvalued only because they weren’t considering the bullish thesis. In either case, more research is warranted.