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Spirit Airlines Incorporated (SAVE): Are Hedge Funds Right About This Stock?: Delta Air Lines, Inc. (DAL), United Continental Holdings Inc (UAL)

Spirit Airlines Incorporated (NASDAQ:SAVE) shareholders have witnessed a decrease in enthusiasm from smart money lately.

Spirit Airlines Incorporated (NASDAQ:SAVE)According to most market participants, hedge funds are viewed as worthless, old financial tools of the past. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey hone in on the aristocrats of this club, close to 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total capital, and by watching their best investments, we have found a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Equally as beneficial, positive insider trading activity is another way to break down the marketplace. Just as you’d expect, there are a number of motivations for an executive to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this method if shareholders know what to do (learn more here).

Consequently, it’s important to take a gander at the recent action surrounding Spirit Airlines Incorporated (NASDAQ:SAVE).

What does the smart money think about Spirit Airlines Incorporated (NASDAQ:SAVE)?

At the end of the fourth quarter, a total of 11 of the hedge funds we track were bullish in this stock, a change of -15% from one quarter earlier. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes considerably.

When looking at the hedgies we track, PAR Capital Management, managed by Paul Reeder and Edward Shapiro, holds the most valuable position in Spirit Airlines Incorporated (NASDAQ:SAVE). PAR Capital Management has a $53 million position in the stock, comprising 2.3% of its 13F portfolio. Sitting at the No. 2 spot is Anchorage Advisors, managed by Kevin Michael Ulrich, which held a $27 million position; 0% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Joel Greenblatt’s Gotham Asset Management, D. E. Shaw’s D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors.

Because Spirit Airlines Incorporated (NASDAQ:SAVE) has witnessed falling interest from the smart money, we can see that there is a sect of funds who were dropping their positions entirely in Q4. Interestingly, Charles Davidson’s Wexford Capital dumped the biggest investment of all the hedgies we key on, totaling an estimated $1 million in stock.. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also cut its stock, about $1 million worth. These moves are interesting, as total hedge fund interest fell by 2 funds in Q4.

Insider trading activity in Spirit Airlines Incorporated (NASDAQ:SAVE)

Insider purchases made by high-level executives is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the last half-year time period, Spirit Airlines Incorporated (NASDAQ:SAVE) has experienced zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Spirit Airlines Incorporated (NASDAQ:SAVE). These stocks are Delta Air Lines, Inc. (NYSE:DAL), United Continental Holdings Inc (NYSE:UAL), China Southern Airlines Co Ltd (ADR) (NYSE:ZNH), China Eastern Airlines Corp. Ltd. (ADR) (NYSE:CEA), and US Airways Group, Inc. (NYSE:LCC). This group of stocks are in the major airlines industry and their market caps are similar to SAVE’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Delta Air Lines, Inc. (NYSE:DAL) 56 0 5
United Continental Holdings Inc (NYSE:UAL) 34 0 3
China Southern Airlines Co Ltd (ADR) (NYSE:ZNH) 1 0 0
China Eastern Airlines Corp. Ltd. (ADR) (NYSE:CEA) 1 0 0
US Airways Group, Inc. (NYSE:LCC) 33 0 1

With the returns exhibited by our time-tested strategies, retail investors should always watch hedge fund and insider trading sentiment, and Spirit Airlines Incorporated (NASDAQ:SAVE) shareholders fit into this picture quite nicely.

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Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.