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Were Hedge Funds Right About JetBlue Airways Corporation (JBLU)?

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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on JetBlue Airways Corporation (NASDAQ:JBLU).

JetBlue Airways Corporation (NASDAQ:JBLU) was in 30 hedge funds' portfolios at the end of June. The all time high for this statistic is 42. JBLU has experienced an increase in support from the world's most elite money managers in recent months. There were 29 hedge funds in our database with JBLU positions at the end of the first quarter. Our calculations also showed that JBLU isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

To most stock holders, hedge funds are perceived as unimportant, outdated financial tools of yesteryear. While there are over 8000 funds with their doors open at present, Our experts look at the aristocrats of this group, about 850 funds. These money managers handle the majority of the smart money's total asset base, and by shadowing their best picks, Insider Monkey has deciphered a number of investment strategies that have historically defeated the market. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year 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.


Cliff Asness of AQR Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, 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. Now let's go over the fresh hedge fund action encompassing JetBlue Airways Corporation (NASDAQ:JBLU).

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

At Q2's end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options in JBLU a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

Among these funds, Citadel Investment Group held the most valuable stake in JetBlue Airways Corporation (NASDAQ:JBLU), which was worth $57.3 million at the end of the second quarter. On the second spot was Millennium Management which amassed $48.4 million worth of shares. AQR Capital Management, Candlestick Capital Management, and PAR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Potrero Capital Research allocated the biggest weight to JetBlue Airways Corporation (NASDAQ:JBLU), around 2% of its 13F portfolio. PAR Capital Management is also relatively very bullish on the stock, designating 0.82 percent of its 13F equity portfolio to JBLU.

As aggregate interest increased, specific money managers were leading the bulls' herd. Renaissance Technologies, established the most outsized position in JetBlue Airways Corporation (NASDAQ:JBLU). Renaissance Technologies had $28.9 million invested in the company at the end of the quarter. Jack Woodruff's Candlestick Capital Management also made a $10.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace's Marshall Wace LLP, Steve Zheng's Deepcurrents Investment Group, and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as JetBlue Airways Corporation (NASDAQ:JBLU) but similarly valued. These stocks are Inovalon Holdings Inc (NASDAQ:INOV), Ashland Global Holdings Inc.. (NYSE:ASH), Enstar Group Ltd. (NASDAQ:ESGR), QTS Realty Trust Inc (NYSE:QTS), Gates Industrial Corporation plc (NYSE:GTES), Glacier Bancorp, Inc. (NASDAQ:GBCI), and Inspire Medical Systems, Inc. (NYSE:INSP). This group of stocks' market caps resemble JBLU's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INOV,20,145599,3 ASH,28,933462,-8 ESGR,11,495727,0 QTS,39,1285562,17 GTES,19,89195,1 GBCI,11,51205,-5 INSP,32,544165,4 Average,22.9,506416,1.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $506 million. That figure was $402 million in JBLU's case. QTS Realty Trust Inc (NYSE:QTS) is the most popular stock in this table. On the other hand Enstar Group Ltd. (NASDAQ:ESGR) is the least popular one with only 11 bullish hedge fund positions. JetBlue Airways Corporation (NASDAQ:JBLU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JBLU is 61.4. 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 JBLU wasn't nearly as popular as these 5 stocks and hedge funds that were betting on JBLU were disappointed as the stock returned -3.9% 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.