The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought American Airlines Group Inc (NASDAQ:AAL) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is American Airlines Group Inc (NASDAQ:AAL) a buy here? Hedge funds were becoming hopeful. The number of long hedge fund bets advanced by 11 recently. American Airlines Group Inc (NASDAQ:AAL) was in 47 hedge funds' portfolios at the end of June. The all time high for this statistics is 77. Our calculations also showed that AAL 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 the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ken Griffin of Citadel Investment Group
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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 precious metals 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 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. With all of this in mind let's take a glance at the latest hedge fund action surrounding American Airlines Group Inc (NASDAQ:AAL).
How are hedge funds trading American Airlines Group Inc (NASDAQ:AAL)?
Heading into the third quarter of 2020, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from one quarter earlier. On the other hand, there were a total of 34 hedge funds with a bullish position in AAL a year ago. 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 American Airlines Group Inc (NASDAQ:AAL) was held by Citadel Investment Group, which reported holding $129.7 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $119 million position. Other investors bullish on the company included D E Shaw, PAR Capital Management, and Alkeon Capital Management. In terms of the portfolio weights assigned to each position Key Square Capital Management allocated the biggest weight to American Airlines Group Inc (NASDAQ:AAL), around 1.57% of its 13F portfolio. PAR Capital Management is also relatively very bullish on the stock, designating 1.35 percent of its 13F equity portfolio to AAL.
As aggregate interest increased, some big names have been driving this bullishness. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, initiated the most outsized position in American Airlines Group Inc (NASDAQ:AAL). LMR Partners had $18.8 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $9.4 million position during the quarter. The other funds with brand new AAL positions are Leon Shaulov's Maplelane Capital, Joseph Samuels's Islet Management, and Joe DiMenna's ZWEIG DIMENNA PARTNERS.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as American Airlines Group Inc (NASDAQ:AAL) but similarly valued. These stocks are RealPage, Inc. (NASDAQ:RP), Commerce Bancshares, Inc. (NASDAQ:CBSH), Dolby Laboratories, Inc. (NYSE:DLB), UGI Corp (NYSE:UGI), Diamondback Energy Inc (NASDAQ:FANG), Carlisle Companies, Inc. (NYSE:CSL), and The Boston Beer Company Inc (NYSE:SAM). This group of stocks' market valuations are similar to AAL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RP,39,739694,10 CBSH,16,52750,1 DLB,28,489505,-1 UGI,26,220118,-1 FANG,29,105362,-2 CSL,38,339108,15 SAM,32,804033,8 Average,29.7,392939,4.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.7 hedge funds with bullish positions and the average amount invested in these stocks was $393 million. That figure was $437 million in AAL's case. RealPage, Inc. (NASDAQ:RP) is the most popular stock in this table. On the other hand Commerce Bancshares, Inc. (NASDAQ:CBSH) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks American Airlines Group Inc (NASDAQ:AAL) is more popular among hedge funds. Our overall hedge fund sentiment score for AAL is 78.3. 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. 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 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Unfortunately AAL wasn't nearly as popular as these 10 stocks and hedge funds that were betting on AAL were disappointed as the stock returned -0.2% since the end of the second quarter 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.