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Did Hedge Funds Drop The Ball On AerCap Holdings N.V. (AER) ?

Reymerlyn Martin

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of AerCap Holdings N.V. (NYSE:AER) based on that data.

AerCap Holdings N.V. (NYSE:AER) investors should be aware of an increase in hedge fund sentiment recently. Our calculations also showed that AER isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_30647" align="aligncenter" width="592"] Boykin Curry of Eagle Capital[/caption]

Boykin Curry EAGLE CAPITAL MANAGEMENT

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the new hedge fund action encompassing AerCap Holdings N.V. (NYSE:AER).

How have hedgies been trading AerCap Holdings N.V. (NYSE:AER)?

Heading into the fourth quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AER over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

AER_dec2019

When looking at the institutional investors followed by Insider Monkey, Eagle Capital Management, managed by Boykin Curry, holds the most valuable position in AerCap Holdings N.V. (NYSE:AER). Eagle Capital Management has a $486.3 million position in the stock, comprising 1.7% of its 13F portfolio. Coming in second is Andrew Wellington and Jeff Keswin of Lyrical Asset Management, with a $298.1 million position; 4.5% of its 13F portfolio is allocated to the stock. Some other peers that are bullish contain David Einhorn's Greenlight Capital, Matthew Lindenbaum's Basswood Capital and Noam Gottesman's GLG Partners. In terms of the portfolio weights assigned to each position Greenlight Capital allocated the biggest weight to AerCap Holdings N.V. (NYSE:AER), around 13.72% of its portfolio. Cobalt Capital Management is also relatively very bullish on the stock, designating 7.59 percent of its 13F equity portfolio to AER.

As one would reasonably expect, key money managers were breaking ground themselves. Perella Weinberg Partners, assembled the biggest position in AerCap Holdings N.V. (NYSE:AER). Perella Weinberg Partners had $2.1 million invested in the company at the end of the quarter. Paul J. Isaac's Arbiter Partners Capital Management also initiated a $1.3 million position during the quarter. The other funds with new positions in the stock are Karim Abbadi and Edward McBride's Centiva Capital, Matthew Tewksbury's Stevens Capital Management, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as AerCap Holdings N.V. (NYSE:AER) but similarly valued. These stocks are Levi Strauss & Co. (NYSE:LEVI), Qiagen NV (NYSE:QGEN), Tapestry, Inc. (NYSE:TPR), and James Hardie Industries plc (NYSE:JHX). All of these stocks' market caps resemble AER's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LEVI,10,21784,-5 QGEN,22,277049,-3 TPR,24,385305,-8 JHX,2,6880,0 Average,14.5,172755,-4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $173 million. That figure was $1220 million in AER's case. Tapestry, Inc. (NYSE:TPR) is the most popular stock in this table. On the other hand James Hardie Industries plc (NYSE:JHX) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks AerCap Holdings N.V. (NYSE:AER) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on AER as the stock returned 12.9% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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