Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to The Boeing Company (NYSE:BA) changed recently.
The Boeing Company (NYSE:BA) has seen a decrease in support from the world’s most elite money managers recently. The Boeing Company (NYSE:BA) was in 39 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 83. There were 54 hedge funds in our database with BA positions at the end of the first quarter. Our calculations also showed that BA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are a multitude of formulas investors have at their disposal to grade publicly traded companies. Some of the less known formulas are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outpace the broader indices by a solid amount (see the details here).
Philippe Laffont of Coatue Management
At Insider Monkey we scour multiple sources to uncover 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 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let’s take a gander at the fresh hedge fund action surrounding The Boeing Company (NYSE:BA).
How are hedge funds trading The Boeing Company (NYSE:BA)?
Heading into the third quarter of 2020, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -28% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BA over the last 20 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in The Boeing Company (NYSE:BA) was held by Citadel Investment Group, which reported holding $1011.8 million worth of stock at the end of June. It was followed by Coatue Management with a $504.1 million position. Other investors bullish on the company included Citadel Investment Group, Adage Capital Management, and Alkeon Capital Management. In terms of the portfolio weights assigned to each position Heard Capital allocated the biggest weight to The Boeing Company (NYSE:BA), around 4.57% of its 13F portfolio. Coatue Management is also relatively very bullish on the stock, designating 4.44 percent of its 13F equity portfolio to BA.
Seeing as The Boeing Company (NYSE:BA) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of money managers who sold off their entire stakes heading into Q3. Interestingly, Benjamin A. Smith’s Laurion Capital Management sold off the largest position of all the hedgies followed by Insider Monkey, comprising about $26.1 million in stock. Kenneth Mario Garschina’s fund, Mason Capital Management, also said goodbye to its stock, about $23.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 15 funds heading into Q3.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The Boeing Company (NYSE:BA) but similarly valued. We will take a look at PetroChina Company Limited (NYSE:PTR), Pinduoduo Inc. (NASDAQ:PDD), QUALCOMM, Incorporated (NASDAQ:QCOM), Lockheed Martin Corporation (NYSE:LMT), GlaxoSmithKline plc (NYSE:GSK), Lowe’s Companies, Inc. (NYSE:LOW), and Honeywell International Inc. (NYSE:HON). 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 |
|---|---|---|---|
| PTR | 6 | 63660 | -1 |
| PDD | 30 | 4149572 | 2 |
| QCOM | 74 | 2202796 | 14 |
| LMT | 53 | 1553657 | -2 |
| GSK | 28 | 2068711 | 1 |
| LOW | 89 | 6589304 | 18 |
| HON | 50 | 1447569 | 6 |
| Average | 47.1 | 2582181 | 5.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 47.1 hedge funds with bullish positions and the average amount invested in these stocks was $2582 million. That figure was $1280 million in BA’s case. Lowe’s Companies, Inc. (NYSE:LOW) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 6 bullish hedge fund positions. The Boeing Company (NYSE:BA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BA is 24. 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 negative signal and 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 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and surpassed the market again by 20.1 percentage points. Unfortunately BA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); BA investors were disappointed as the stock returned -21.2% since the end of June (through 10/30) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
