We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Air Lease Corp (NYSE:AL).
Air Lease Corp (NYSE:AL) has seen a decrease in support from the world’s most elite money managers in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Brinker International, Inc. (NYSE:EAT), Virtu Financial Inc (NASDAQ:VIRT), and Piedmont Natural Gas Company, Inc. (NYSE:PNY) to gather more data points.
Follow Air Lease Corp (NYSE:AL)
Follow Air Lease Corp (NYSE:AL)
Today there are plenty of formulas investors use to evaluate their stock investments. A pair of the less utilized formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can trounce their index-focused peers by a very impressive amount (see the details here).
With all of this in mind, let’s check out the fresh action regarding Air Lease Corp (NYSE:AL).
How are hedge funds trading Air Lease Corp (NYSE:AL)?
At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 7% from one quarter earlier. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Peter Adam Hochfelder’s Brahman Capital has the largest position in Air Lease Corp (NYSE:AL), worth close to $141 million, corresponding to 2.8% of its total 13F portfolio. On Brahman Capital’s heels is Osterweis Capital Management, led by John Osterweis, holding an $85 million position; 3.8% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism contain Chuck Royce’s Royce & Associates and Bernard Selz’s Selz Capital.
Due to the fact that Air Lease Corp (NYSE:AL) has faced a declination in interest from hedge fund managers, we can see that there exists a select few money managers who sold off their full holdings in the third quarter. Intriguingly, Ken Griffin’s Citadel Investment Group dumped the largest stake of the 700 funds tracked by Insider Monkey, totaling an estimated $20.6 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund sold off about $9.2 million worth of AL shares. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Air Lease Corp (NYSE:AL). These stocks are Brinker International, Inc. (NYSE:EAT), Virtu Financial Inc (NASDAQ:VIRT), Piedmont Natural Gas Company, Inc. (NYSE:PNY), and Horizon Pharma Inc (NASDAQ:HZNP). This group of stocks’ market valuations match AL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EAT | 27 | 213658 | -4 |
| VIRT | 12 | 73049 | -6 |
| PNY | 10 | 34284 | 2 |
| HZNP | 44 | 1127993 | 1 |
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $362 million. That figure was $511 million in AL’s case. Horizon Pharma Inc (NASDAQ:HZNP) is the most popular stock in this table, while Piedmont Natural Gas Company, Inc. (NYSE:PNY) is at the other end of the specter with only 10 bullish hedge fund positions. Air Lease Corp (NYSE:AL) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HZNP might be a better candidate to consider a long position.
