Were Hedge Funds Right About Boeing (BA)?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards The Boeing Company (NYSE:BA) to find out whether there were any major changes in hedge funds’ views.

The Boeing Company (NYSE:BA) was in 55 hedge funds’ portfolios at the end of December. The all time high for this statistic is 83. BA investors should be aware of an increase in hedge fund interest lately. There were 43 hedge funds in our database with BA positions at the end of the third quarter. Our calculations also showed that BA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

To most market participants, hedge funds are seen as unimportant, old financial tools of the past. While there are greater than 8000 funds in operation today, Our researchers choose to focus on the leaders of this group, around 850 funds. These investment experts orchestrate the majority of all hedge funds’ total asset base, and by tailing their top picks, Insider Monkey has uncovered several investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Sahm Adrangi Kerrisdale Capital

Sahm Adrangi of Kerrisdale Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a gander at the recent hedge fund action surrounding The Boeing Company (NYSE:BA).

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

Heading into the first quarter of 2021, a total of 55 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 28% from the third quarter of 2020. On the other hand, there were a total of 82 hedge funds with a bullish position in BA a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Millennium Management, managed by Israel Englander, holds the number one position in The Boeing Company (NYSE:BA). Millennium Management has a $178.3 million position in the stock, comprising 0.1% of its 13F portfolio. On Millennium Management’s heels is Citadel Investment Group, managed by Ken Griffin, which holds a $136.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions consist of Phill Gross and Robert Atchinson’s Adage Capital Management, Hari Hariharan’s NWI Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Jade Capital Advisors allocated the biggest weight to The Boeing Company (NYSE:BA), around 7.11% of its 13F portfolio. Heard Capital is also relatively very bullish on the stock, designating 6.29 percent of its 13F equity portfolio to BA.

As one would reasonably expect, specific money managers were breaking ground themselves. Renaissance Technologies, initiated the biggest position in The Boeing Company (NYSE:BA). Renaissance Technologies had $53.1 million invested in the company at the end of the quarter. Philippe Laffont’s Coatue Management also made a $44.8 million investment in the stock during the quarter. The following funds were also among the new BA investors: Anand Parekh’s Alyeska Investment Group, Clint Murray’s Lodge Hill Capital, and Sahm Adrangi’s Kerrisdale Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as The Boeing Company (NYSE:BA) but similarly valued. These stocks are Lowe’s Companies, Inc. (NYSE:LOW), China Mobile Limited (NYSE:CHL), Royal Bank of Canada (NYSE:RY), International Business Machines Corp. (NYSE:IBM), Advanced Micro Devices, Inc. (NASDAQ:AMD), TOTAL SE (NYSE:TOT), and BlackRock, Inc. (NYSE:BLK). All of these stocks’ market caps resemble BA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LOW 71 5192115 -12
CHL 13 275668 3
RY 18 177204 2
IBM 51 998446 11
AMD 74 6688629 3
TOT 14 980330 -4
BLK 53 1155646 14
Average 42 2209720 2.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 42 hedge funds with bullish positions and the average amount invested in these stocks was $2210 million. That figure was $1057 million in BA’s case. Advanced Micro Devices, Inc. (NASDAQ:AMD) is the most popular stock in this table. On the other hand China Mobile Limited (NYSE:CHL) is the least popular one with only 13 bullish hedge fund positions. The Boeing Company (NYSE:BA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BA is 64.3. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and beat the market again by 1.6 percentage points. Unfortunately BA wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BA were disappointed as the stock returned 9.5% since the end of December (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.