Did Hedge Funds Catch A Break With Sabre Corporation (SABR)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional 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. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Sabre Corporation (NASDAQ:SABR) and determine whether hedge funds skillfully traded this stock.

Is Sabre Corporation (NASDAQ:SABR) a first-rate investment today? Investors who are in the know were becoming less hopeful. The number of long hedge fund positions went down by 6 lately. Sabre Corporation (NASDAQ:SABR) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 46. Our calculations also showed that SABR 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 let’s take a gander at the latest hedge fund action regarding Sabre Corporation (NASDAQ:SABR).

Paul Reeder of PAR Capital Management

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

At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from the previous quarter. By comparison, 31 hedge funds held shares or bullish call options in SABR a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Among these funds, Fundsmith LLP held the most valuable stake in Sabre Corporation (NASDAQ:SABR), which was worth $237.9 million at the end of the third quarter. On the second spot was PAR Capital Management which amassed $159.6 million worth of shares. Yiheng Capital, Knighthead Capital, and Marshall Wace LLP 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 Collaborative Holdings Management allocated the biggest weight to Sabre Corporation (NASDAQ:SABR), around 9.64% of its 13F portfolio. Hill City Capital is also relatively very bullish on the stock, earmarking 9.36 percent of its 13F equity portfolio to SABR.

Because Sabre Corporation (NASDAQ:SABR) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there were a few hedge funds that decided to sell off their full holdings heading into Q4. At the top of the heap, Andy Redleaf’s Whitebox Advisors dumped the largest investment of all the hedgies followed by Insider Monkey, totaling about $18.2 million in stock, and Brian Ashford-Russell and Tim Woolley’s Polar Capital was right behind this move, as the fund cut about $9.6 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 6 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to Sabre Corporation (NASDAQ:SABR). These stocks are CONMED Corporation (NYSE:CNMD), Veoneer, Inc. (NYSE:VNE), Perficient, Inc. (NASDAQ:PRFT), ImmunityBio, Inc. (NASDAQ:IBRX), Asbury Automotive Group, Inc. (NYSE:ABG), First Hawaiian, Inc. (NASDAQ:FHB), and Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC). This group of stocks’ market caps are closest to SABR’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.6 hedge funds with bullish positions and the average amount invested in these stocks was $285 million. That figure was $878 million in SABR’s case. Veoneer, Inc. (NYSE:VNE) is the most popular stock in this table. On the other hand ImmunityBio, Inc. (NASDAQ:IBRX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Sabre Corporation (NASDAQ:SABR) is more popular among hedge funds. Our overall hedge fund sentiment score for SABR is 69.2. 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 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 and still beat the market by 3.6 percentage points. Unfortunately, SABR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SABR were disappointed as the stock returned -22.7% since the end of the third quarter (through 1/31) 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 all of these stocks already outperformed the market since 2019.

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