The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards United Airlines Holdings Inc (NASDAQ:UAL).
United Airlines Holdings Inc (NASDAQ:UAL) investors should be aware of an increase in enthusiasm from smart money of late. United Airlines Holdings Inc (NASDAQ:UAL) was in 39 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 73. Our calculations also showed that UAL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Paul Reeder of PAR Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. Keeping this in mind let’s view the fresh hedge fund action regarding United Airlines Holdings Inc (NASDAQ:UAL).
Do Hedge Funds Think UAL Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in UAL over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Griffin’s Citadel Investment Group has the biggest call position in United Airlines Holdings Inc (NASDAQ:UAL), worth close to $271.5 million, amounting to 0.1% of its total 13F portfolio. The second largest stake is held by PAR Capital Management, managed by Paul Reeder and Edward Shapiro, which holds a $226.7 million position; the fund has 5.6% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Brad Gerstner’s Altimeter Capital Management, and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position PAR Capital Management allocated the biggest weight to United Airlines Holdings Inc (NASDAQ:UAL), around 5.55% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, earmarking 4.79 percent of its 13F equity portfolio to UAL.
As aggregate interest increased, key money managers have been driving this bullishness. Plaisance Capital, managed by Dan Kozlowski, established the biggest position in United Airlines Holdings Inc (NASDAQ:UAL). Plaisance Capital had $3.6 million invested in the company at the end of the quarter. Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management also initiated a $3.5 million position during the quarter. The other funds with brand new UAL positions are Dan Kozlowski’s Plaisance Capital, Steve Cohen’s Point72 Asset Management, and Ray Dalio’s Bridgewater Associates.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as United Airlines Holdings Inc (NASDAQ:UAL) but similarly valued. We will take a look at Rollins, Inc. (NYSE:ROL), Zai Lab Limited (NASDAQ:ZLAB), Nuance Communications Inc. (NASDAQ:NUAN), IDEX Corporation (NYSE:IEX), Entegris Inc (NASDAQ:ENTG), VICI Properties Inc. (NYSE:VICI), and Dynatrace, Inc. (NYSE:DT). This group of stocks’ market values match UAL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ROL | 30 | 610715 | 0 |
| ZLAB | 36 | 1029464 | 4 |
| NUAN | 72 | 5576065 | 15 |
| IEX | 22 | 945302 | 3 |
| ENTG | 25 | 1389606 | 2 |
| VICI | 37 | 664684 | -4 |
| DT | 50 | 1949953 | -2 |
| Average | 38.9 | 1737970 | 2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.9 hedge funds with bullish positions and the average amount invested in these stocks was $1738 million. That figure was $704 million in UAL’s case. Nuance Communications Inc. (NASDAQ:NUAN) is the most popular stock in this table. On the other hand IDEX Corporation (NYSE:IEX) is the least popular one with only 22 bullish hedge fund positions. United Airlines Holdings Inc (NASDAQ:UAL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UAL is 39. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 through November 5th and beat the market again by 3.1 percentage points. Unfortunately UAL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on UAL were disappointed as the stock returned 0.8% since the end of June (through 11/5) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 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.
