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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards American Airlines Group Inc (NASDAQ:AAL).
Is AAL aa good stock to buy? Investors who are in the know were becoming less confident. The number of bullish hedge fund positions fell by 7 recently. American Airlines Group Inc (NASDAQ:AAL) was in 25 hedge funds' portfolios at the end of June. The all time high for this statistic is 77. Our calculations also showed that AAL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
According to most stock holders, hedge funds are seen as underperforming, old investment tools of the past. While there are over 8000 funds with their doors open at the moment, We look at the upper echelon of this group, around 850 funds. Most estimates calculate that this group of people preside over the lion's share of all hedge funds' total capital, and by tracking their unrivaled investments, Insider Monkey has spotted a number of investment strategies that have historically beaten the broader indices. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
David Siegel of Two Sigma Advisors
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 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. With all of this in mind let's take a gander at the fresh hedge fund action surrounding American Airlines Group Inc (NASDAQ:AAL).
Do Hedge Funds Think AAL Is A Good Stock To Buy Now?
At the end of June, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AAL over the last 24 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in American Airlines Group Inc (NASDAQ:AAL) was held by Citadel Investment Group, which reported holding $168.6 million worth of stock at the end of June. It was followed by Two Sigma Advisors with a $166.4 million position. Other investors bullish on the company included Alkeon Capital Management, Citadel Investment Group, and D E Shaw. In terms of the portfolio weights assigned to each position Jade Capital Advisors allocated the biggest weight to American Airlines Group Inc (NASDAQ:AAL), around 2.94% of its 13F portfolio. Cartenna Capital is also relatively very bullish on the stock, dishing out 1.52 percent of its 13F equity portfolio to AAL.
Due to the fact that American Airlines Group Inc (NASDAQ:AAL) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there lies a certain "tier" of funds who sold off their entire stakes last quarter. At the top of the heap, Josh Resnick's Jericho Capital Asset Management sold off the largest stake of the "upper crust" of funds watched by Insider Monkey, worth close to $51 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund dumped about $21.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 7 funds last quarter.
Let's check out hedge fund activity in other stocks similar to American Airlines Group Inc (NASDAQ:AAL). These stocks are Centrais Elétricas Brasileiras S.A. - Eletrobrás (NYSE:EBR), UWM Holdings Corporation (NYSE:UWMC), Equity Lifestyle Properties, Inc. (NYSE:ELS), Advance Auto Parts, Inc. (NYSE:AAP), W.P. Carey Inc. (NYSE:WPC), Mohawk Industries, Inc. (NYSE:MHK), and Elastic N.V. (NYSE:ESTC). All of these stocks' market caps are similar to AAL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EBR,5,3151,0 UWMC,20,66732,1 ELS,25,477660,-4 AAP,34,849879,-9 WPC,29,147455,6 MHK,44,1311640,8 ESTC,55,3062021,3 Average,30.3,845505,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $846 million. That figure was $620 million in AAL's case. Elastic N.V. (NYSE:ESTC) is the most popular stock in this table. On the other hand Centrais Elétricas Brasileiras S.A. - Eletrobrás (NYSE:EBR) is the least popular one with only 5 bullish hedge fund positions. American Airlines Group Inc (NASDAQ:AAL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AAL is 27.7. 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 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 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately AAL wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AAL investors were disappointed as the stock returned -9.7% since the end of June (through 10/22) 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 in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.