Should You Buy Sabre Corporation (SABR)?

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Sabre Corporation (NASDAQ:SABR).

Is Sabre Corporation (NASDAQ:SABR) undervalued? Hedge funds are becoming hopeful. The number of bullish hedge fund bets inched up by 13 lately. Our calculations also showed that SABR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most stock holders, hedge funds are viewed as underperforming, old investment vehicles of years past. While there are more than 8000 funds in operation at present, Our researchers hone in on the crème de la crème of this club, approximately 750 funds. These hedge fund managers administer bulk of the smart money’s total capital, and by observing their finest stock picks, Insider Monkey has revealed a number of investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s go over the fresh hedge fund action regarding Sabre Corporation (NASDAQ:SABR).

What does smart money think about Sabre Corporation (NASDAQ:SABR)?

Heading into the fourth quarter of 2019, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 108% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SABR over the last 17 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).


The largest stake in Sabre Corporation (NASDAQ:SABR) was held by Millennium Management, which reported holding $46.5 million worth of stock at the end of September. It was followed by D E Shaw with a $38.1 million position. Other investors bullish on the company included Echo Street Capital Management, Two Sigma Advisors, and MD Sass. In terms of the portfolio weights assigned to each position MD Sass allocated the biggest weight to Sabre Corporation (NASDAQ:SABR), around 5.12% of its portfolio. Element Capital Management is also relatively very bullish on the stock, setting aside 1.73 percent of its 13F equity portfolio to SABR.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Element Capital Management, managed by Jeffrey Talpins, created the most valuable position in Sabre Corporation (NASDAQ:SABR). Element Capital Management had $19.9 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $7.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace, Donald Sussman’s Paloma Partners, and Benjamin A. Smith’s Laurion Capital Management.

Let’s also examine 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 First Solar, Inc. (NASDAQ:FSLR), Ciena Corporation (NYSE:CIEN), Anaplan, Inc. (NYSE:PLAN), and Owl Rock Capital Corporation (NYSE:ORCC). All of these stocks’ market caps match SABR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FSLR 30 347342 6
CIEN 29 489215 -7
PLAN 42 2009371 5
ORCC 6 141871 6
Average 26.75 746950 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $747 million. That figure was $224 million in SABR’s case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand Owl Rock Capital Corporation (NYSE:ORCC) is the least popular one with only 6 bullish hedge fund positions. Sabre Corporation (NASDAQ:SABR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SABR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SABR investors were disappointed as the stock returned 0.2% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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