Allegiant Travel Company (ALGT): Hedge Funds Taking Some Chips Off The Table

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Allegiant Travel Company (NASDAQ:ALGT) to find out whether there were any major changes in hedge funds’ views.

Allegiant Travel Company (NASDAQ:ALGT) was in 26 hedge funds’ portfolios at the end of September. The all time high for this statistic is 29. ALGT has seen a decrease in hedge fund sentiment in recent months. There were 29 hedge funds in our database with ALGT holdings at the end of June. Our calculations also showed that ALGT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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 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. Keeping this in mind we’re going to review the recent hedge fund action surrounding Allegiant Travel Company (NASDAQ:ALGT).

Paul Reeder of PAR Capital Management

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

Heading into the fourth quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in ALGT a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, PAR Capital Management, managed by Paul Reeder and Edward Shapiro, holds the most valuable position in Allegiant Travel Company (NASDAQ:ALGT). PAR Capital Management has a $109.4 million position in the stock, comprising 2.6% of its 13F portfolio. The second largest stake is held by Dmitry Balyasny of Balyasny Asset Management, with a $62.5 million position; 0.3% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions comprise Stuart J. Zimmer’s Zimmer Partners, Philip Timon’s Owls Nest Partners and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Billings Capital Management allocated the biggest weight to Allegiant Travel Company (NASDAQ:ALGT), around 13.92% of its 13F portfolio. Owls Nest Partners is also relatively very bullish on the stock, dishing out 8.1 percent of its 13F equity portfolio to ALGT.

Seeing as Allegiant Travel Company (NASDAQ:ALGT) has faced a decline in interest from hedge fund managers, it’s easy to see that there were a few hedge funds who sold off their full holdings in the third quarter. Intriguingly, Matthew Stadelman’s Diamond Hill Capital sold off the largest stake of the 750 funds tracked by Insider Monkey, worth an estimated $62.6 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also dropped its stock, about $3.8 million worth. These transactions are interesting, as total hedge fund interest dropped by 3 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to Allegiant Travel Company (NASDAQ:ALGT). These stocks are Methanex Corporation (NASDAQ:MEOH), Matson Inc. (NYSE:MATX), Triton International Limited (NYSE:TRTN), Chimera Investment Corporation (NYSE:CIM), Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), LGI Homes Inc (NASDAQ:LGIH), and Rogers Corporation (NYSE:ROG). This group of stocks’ market valuations are similar to ALGT’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $211 million. That figure was $338 million in ALGT’s case. Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) is the most popular stock in this table. On the other hand Matson Inc. (NYSE:MATX) is the least popular one with only 13 bullish hedge fund positions. Allegiant Travel Company (NASDAQ:ALGT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ALGT 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately ALGT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ALGT were disappointed as the stock returned -2.3% since the end of September (through 12/9) 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.