The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at 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. Stocks kept going up since then. In this article we look at how hedge funds traded Spirit AeroSystems Holdings, Inc. (NYSE:SPR) and determine whether the smart money was really smart about this stock.
Spirit AeroSystems Holdings, Inc. (NYSE:SPR) was in 37 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 50. SPR has experienced a decrease in hedge fund interest recently. There were 38 hedge funds in our database with SPR holdings at the end of March. Our calculations also showed that SPR 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.
To most traders, hedge funds are viewed as worthless, outdated investment tools of the past. While there are over 8000 funds with their doors open at the moment, Our researchers hone in on the bigwigs of this club, around 850 funds. These hedge fund managers oversee bulk of all hedge funds' total capital, and by monitoring their unrivaled investments, Insider Monkey has unsheathed various investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover 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 and boost precious metals prices. So, we are checking out this junior gold mining stock. 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. 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. Keeping this in mind let's analyze the new hedge fund action encompassing Spirit AeroSystems Holdings, Inc. (NYSE:SPR).
What does smart money think about Spirit AeroSystems Holdings, Inc. (NYSE:SPR)?
At Q2's end, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the first quarter of 2020. On the other hand, there were a total of 31 hedge funds with a bullish position in SPR a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Spirit AeroSystems Holdings, Inc. (NYSE:SPR) was held by Darsana Capital Partners, which reported holding $167.6 million worth of stock at the end of September. It was followed by Scopia Capital with a $144 million position. Other investors bullish on the company included OZ Management, Two Creeks Capital Management, and Maple Rock Capital. In terms of the portfolio weights assigned to each position Scopia Capital allocated the biggest weight to Spirit AeroSystems Holdings, Inc. (NYSE:SPR), around 15.84% of its 13F portfolio. Darsana Capital Partners is also relatively very bullish on the stock, dishing out 9.93 percent of its 13F equity portfolio to SPR.
Because Spirit AeroSystems Holdings, Inc. (NYSE:SPR) has experienced a decline in interest from hedge fund managers, we can see that there lies a certain "tier" of hedge funds that elected to cut their positions entirely by the end of the second quarter. It's worth mentioning that Seth Klarman's Baupost Group dumped the biggest position of the "upper crust" of funds watched by Insider Monkey, valued at about $25.6 million in stock. Jonathan Auerbach's fund, Hound Partners, also said goodbye to its stock, about $18.8 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds by the end of the second quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Spirit AeroSystems Holdings, Inc. (NYSE:SPR) but similarly valued. We will take a look at Workiva Inc (NYSE:WK), The Chemours Company (NYSE:CC), Casella Waste Systems Inc. (NASDAQ:CWST), eHealth, Inc. (NASDAQ:EHTH), Wintrust Financial Corporation (NASDAQ:WTFC), Trinity Industries, Inc. (NYSE:TRN), and Insperity Inc (NYSE:NSP). This group of stocks' market valuations match SPR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WK,21,225806,5 CC,35,389444,3 CWST,16,168060,0 EHTH,30,362328,-5 WTFC,23,141490,-4 TRN,25,824807,7 NSP,29,280537,0 Average,25.6,341782,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $342 million. That figure was $663 million in SPR's case. The Chemours Company (NYSE:CC) is the most popular stock in this table. On the other hand Casella Waste Systems Inc. (NASDAQ:CWST) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Spirit AeroSystems Holdings, Inc. (NYSE:SPR) is more popular among hedge funds. Our overall hedge fund sentiment score for SPR is 76.2. 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 SPR wasn't nearly as popular as these 10 stocks and hedge funds that were betting on SPR were disappointed as the stock returned -14.1% 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.