Were Hedge Funds Right About Selling The Boeing Company (BA)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thought The Boeing Company (NYSE:BA) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

The Boeing Company (NYSE:BA) was in 54 hedge funds’ portfolios at the end of the first quarter of 2020. BA shareholders have witnessed a decrease in enthusiasm from smart money in recent months. There were 82 hedge funds in our database with BA holdings at the end of the previous quarter. Our calculations also showed that BA isn’t among the 30 most popular stocks among hedge funds (click for Q1 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In the eyes of most stock holders, hedge funds are viewed as underperforming, outdated investment vehicles of the past. While there are greater than 8000 funds trading today, Our experts look at the upper echelon of this club, about 850 funds. These investment experts handle bulk of the smart money’s total asset base, and by monitoring their first-class stock picks, Insider Monkey has deciphered various investment strategies that have historically outpaced the 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. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Frank Brosens Taconic Capital

Frank Brosens of Taconic Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, this trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost gold prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a gander at the latest hedge fund action regarding The Boeing Company (NYSE:BA).

Hedge fund activity in The Boeing Company (NYSE:BA)

Heading into the second quarter of 2020, a total of 54 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -34% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BA over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

More specifically, Citadel Investment Group was the largest shareholder of The Boeing Company (NYSE:BA), with a stake worth $557.5 million reported as of the end of September. Trailing Citadel Investment Group was Taconic Capital, which amassed a stake valued at $126.8 million. Canyon Capital Advisors, Theleme Partners, and Pentwater Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Scion Asset Management allocated the biggest weight to The Boeing Company (NYSE:BA), around 10.42% of its 13F portfolio. Mountaineer Partners Management is also relatively very bullish on the stock, earmarking 9.09 percent of its 13F equity portfolio to BA.

Since The Boeing Company (NYSE:BA) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there were a few hedge funds that slashed their full holdings heading into Q4. Intriguingly, Stuart Powers’s Hengistbury Investment Partners said goodbye to the biggest position of all the hedgies followed by Insider Monkey, comprising close to $136.5 million in stock, and Larry Robbins’s Glenview Capital was right behind this move, as the fund cut about $135.8 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 28 funds heading into Q4.

Let’s go over 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 BP plc (NYSE:BP), Raytheon Technologies Corporation (NYSE:UTX), United Parcel Service, Inc. (NYSE:UPS), and 3M Company (NYSE:MMM). This group of stocks’ market valuations are similar to BA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BP 31 877653 -9
UTX 62 4025728 -19
UPS 48 842540 6
MMM 44 516510 -2
Average 46.25 1565608 -6

View table here if you experience formatting issues.

As you can see these stocks had an average of 46.25 hedge funds with bullish positions and the average amount invested in these stocks was $1566 million. That figure was $877 million in BA’s case. Raytheon Technologies Corporation (NYSE:UTX) is the most popular stock in this table. On the other hand BP plc (NYSE:BP) is the least popular one with only 31 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 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on BA, though not to the same extent, as the stock returned 22.9% during the second quarter and outperformed the market as well.

Follow Boeing Co (NYSE:BA)

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