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Is SPR A Good Stock To Buy According To Hedge Funds?

Abigail Fisher
·6 min read

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Spirit AeroSystems Holdings, Inc. (NYSE:SPR) based on those filings.

Is SPR a good stock to buy? Spirit AeroSystems Holdings, Inc. (NYSE:SPR) investors should pay attention to a decrease in hedge fund interest in recent months. Spirit AeroSystems Holdings, Inc. (NYSE:SPR) was in 31 hedge funds' portfolios at the end of September. The all time high for this statistic is 50. Our calculations also showed that SPR isn't among the 30 most popular stocks among hedge funds (click for Q3 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.

If you'd ask most traders, hedge funds are viewed as underperforming, outdated financial tools of the past. While there are greater than 8000 funds trading at the moment, We hone in on the upper echelon of this group, about 850 funds. These money managers shepherd the lion's share of the smart money's total asset base, and by shadowing their inimitable picks, Insider Monkey has figured out many investment strategies that have historically surpassed Mr. Market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Jeremy Mindich - Scopia Capital
Jeremy Mindich - Scopia Capital

Jeremy Mindich of Scopia Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. 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 website. With all of this in mind we're going to review the new hedge fund action regarding Spirit AeroSystems Holdings, Inc. (NYSE:SPR).

Do Hedge Funds Think SPR Is A Good Stock To Buy Now?

At Q3's end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards SPR over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, holds the biggest position in Spirit AeroSystems Holdings, Inc. (NYSE:SPR). Scopia Capital has a $137.4 million position in the stock, comprising 16.2% of its 13F portfolio. The second largest stake is held by Daniel S. Och of OZ Management, with a $98.4 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism contain Ken Griffin's Citadel Investment Group, D. E. Shaw's D E Shaw and Ryan Pedlow's Two Creeks Capital Management. In terms of the portfolio weights assigned to each position Scopia Capital allocated the biggest weight to Spirit AeroSystems Holdings, Inc. (NYSE:SPR), around 16.23% of its 13F portfolio. Maple Rock Capital is also relatively very bullish on the stock, setting aside 3.64 percent of its 13F equity portfolio to SPR.

Because Spirit AeroSystems Holdings, Inc. (NYSE:SPR) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few hedgies that decided to sell off their entire stakes last quarter. Interestingly, Anand Desai's Darsana Capital Partners said goodbye to the largest investment of all the hedgies followed by Insider Monkey, valued at close to $167.6 million in stock, and Michael Blitzer's Kingstown Capital Management was right behind this move, as the fund said goodbye to about $10.8 million worth. These moves are important to note, as total hedge fund interest dropped by 6 funds last quarter.

Let's also examine hedge fund activity in other stocks similar to Spirit AeroSystems Holdings, Inc. (NYSE:SPR). These stocks are BancorpSouth Bank (NYSE:BXS), Insight Enterprises, Inc. (NASDAQ:NSIT), Lions Gate Entertainment Corporation (NYSE:LGF-B), BRP Group, Inc. (NASDAQ:BRP), Materialise NV (NASDAQ:MTLS), FS KKR Capital Corp. (NYSE:FSK), and Sprout Social, Inc. (NASDAQ:SPT). All of these stocks' market caps are closest to SPR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BXS,19,33217,9 NSIT,22,66764,2 LGF-B,22,246159,-4 BRP,10,45833,-6 MTLS,5,7404,1 FSK,11,89179,0 SPT,18,126704,-1 Average,15.3,87894,0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.3 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $469 million in SPR's case. Insight Enterprises, Inc. (NASDAQ:NSIT) is the most popular stock in this table. On the other hand Materialise NV (NASDAQ:MTLS) is the least popular one with only 5 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 67.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on SPR as the stock returned 96.8% since the end of September (through 12/18) 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.

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

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