Is AerCap Holdings N.V. (AER) A Good Stock To Buy?
With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was AerCap Holdings N.V. (NYSE:AER).
Is AER a good stock to buy? AerCap Holdings N.V. (NYSE:AER) investors should pay attention to an increase in activity from the world's largest hedge funds in recent months. AerCap Holdings N.V. (NYSE:AER) was in 43 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 77. There were 40 hedge funds in our database with AER holdings at the end of December. Our calculations also showed that AER isn't among the 30 most popular stocks among hedge funds (click for Q1 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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Matthew Lindenbaum of Basswood Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 take a look at the recent hedge fund action regarding AerCap Holdings N.V. (NYSE:AER).
Do Hedge Funds Think AER Is A Good Stock To Buy Now?
At the end of March, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the fourth quarter of 2020. By comparison, 32 hedge funds held shares or bullish call options in AER a year ago. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, Eagle Capital Management held the most valuable stake in AerCap Holdings N.V. (NYSE:AER), which was worth $409 million at the end of the fourth quarter. On the second spot was Lyrical Asset Management which amassed $311.5 million worth of shares. Basswood Capital, Tiger Management, and Arrowstreet Capital 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 Tiger Management allocated the biggest weight to AerCap Holdings N.V. (NYSE:AER), around 17.66% of its 13F portfolio. Elm Ridge Capital is also relatively very bullish on the stock, earmarking 7.99 percent of its 13F equity portfolio to AER.
As aggregate interest increased, key money managers have jumped into AerCap Holdings N.V. (NYSE:AER) headfirst. Parsifal Capital Management, managed by David Zorub, established the most valuable position in AerCap Holdings N.V. (NYSE:AER). Parsifal Capital Management had $86.5 million invested in the company at the end of the quarter. Michael Weinstock's Monarch Alternative Capital also initiated a $57.2 million position during the quarter. The other funds with new positions in the stock are Brandon Haley's Holocene Advisors, Alexander Mitchell's Scopus Asset Management, and Suzi Nutton (CEO)'s Lansdowne Partners.
Let's also examine hedge fund activity in other stocks similar to AerCap Holdings N.V. (NYSE:AER). We will take a look at First Citizens BancShares Inc. (NASDAQ:FCNCA), Encompass Health Corporation (NYSE:EHC), Kimco Realty Corp (NYSE:KIM), Oshkosh Corporation (NYSE:OSK), Autoliv Inc. (NYSE:ALV), New Fortress Energy LLC (NASDAQ:NFE), and CAE, Inc. (NYSE:CAE). This group of stocks' market caps are closest to AER's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FCNCA,29,606668,2 EHC,36,836170,1 KIM,17,90007,-5 OSK,26,416413,-14 ALV,20,813218,-6 NFE,12,30553,1 CAE,17,113000,7 Average,22.4,415147,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.4 hedge funds with bullish positions and the average amount invested in these stocks was $415 million. That figure was $1675 million in AER's case. Encompass Health Corporation (NYSE:EHC) is the most popular stock in this table. On the other hand New Fortress Energy LLC (NASDAQ:NFE) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks AerCap Holdings N.V. (NYSE:AER) is more popular among hedge funds. Our overall hedge fund sentiment score for AER is 74.8. 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. 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 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Unfortunately AER wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AER were disappointed as the stock returned -9.2% since the end of the first quarter (through 6/18) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
