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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 Delta Air Lines, Inc. (NYSE:DAL).
Delta Air Lines, Inc. (NYSE:DAL) shareholders have witnessed a decrease in hedge fund sentiment lately. Delta Air Lines, Inc. (NYSE:DAL) was in 49 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 109. There were 50 hedge funds in our database with DAL positions at the end of the first quarter. Our calculations also showed that DAL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Paul Reeder of PAR Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining 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 we're going to take a peek at the latest hedge fund action regarding Delta Air Lines, Inc. (NYSE:DAL).
Do Hedge Funds Think DAL Is A Good Stock To Buy Now?
At second quarter's end, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from one quarter earlier. By comparison, 39 hedge funds held shares or bullish call options in DAL a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Delta Air Lines, Inc. (NYSE:DAL) was held by Citadel Investment Group, which reported holding $202.4 million worth of stock at the end of June. It was followed by Lansdowne Partners with a $198.5 million position. Other investors bullish on the company included PAR Capital Management, D E Shaw, and GLG Partners. In terms of the portfolio weights assigned to each position Lansdowne Partners allocated the biggest weight to Delta Air Lines, Inc. (NYSE:DAL), around 7.93% of its 13F portfolio. PAR Capital Management is also relatively very bullish on the stock, earmarking 3.48 percent of its 13F equity portfolio to DAL.
Since Delta Air Lines, Inc. (NYSE:DAL) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there lies a certain "tier" of fund managers who sold off their positions entirely in the second quarter. Interestingly, Robert Henry Lynch's Aristeia Capital dumped the biggest investment of the "upper crust" of funds watched by Insider Monkey, comprising close to $49.1 million in stock, and Jack Woodruff's Candlestick Capital Management was right behind this move, as the fund sold off about $6.6 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds in the second quarter.
Let's check out hedge fund activity in other stocks similar to Delta Air Lines, Inc. (NYSE:DAL). We will take a look at Arista Networks Inc (NYSE:ANET), Eversource Energy (NYSE:ES), Interactive Brokers Group, Inc. (NASDAQ:IBKR), HubSpot Inc (NYSE:HUBS), Coca-Cola Europacific Partners plc (NASDAQ:CCEP), Deutsche Bank Aktiengesellschaft (NYSE:DB), and Laboratory Corp. of America Holdings (NYSE:LH). This group of stocks' market caps match DAL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ANET,35,318271,9 ES,26,391290,2 IBKR,36,1481835,5 HUBS,54,2674601,8 CCEP,31,1300875,6 DB,20,1860258,4 LH,53,2555270,-1 Average,36.4,1511771,4.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.4 hedge funds with bullish positions and the average amount invested in these stocks was $1512 million. That figure was $1218 million in DAL's case. HubSpot Inc (NYSE:HUBS) is the most popular stock in this table. On the other hand Deutsche Bank Aktiengesellschaft (NYSE:DB) is the least popular one with only 20 bullish hedge fund positions. Delta Air Lines, Inc. (NYSE:DAL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DAL is 60.1. 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 positive signal but 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 29.6% in 2021 through November 5th and beat the market again by 3.1 percentage points. Unfortunately DAL wasn't nearly as popular as these 5 stocks and hedge funds that were betting on DAL were disappointed as the stock returned 2.4% since the end of June (through 11/5) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.