Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Boeing Co (NYSE:BA) investors should be aware of a decrease in support from the world’s most elite money managers recently. At the end of this article we will also compare BA to other stocks including Toronto-Dominion Bank (USA) (NYSE:TD), QUALCOMM, Inc. (NASDAQ:QCOM), and Diageo plc (ADR) (NYSE:DEO) to get a better sense of its popularity.
Follow Boeing Co (NYSE:BA)
Follow Boeing Co (NYSE:BA)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, let’s go over the recent action encompassing Boeing Co (NYSE:BA).
What does the smart money think about Boeing Co (NYSE:BA)?
At the end of the third quarter, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 3% from the previous quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Edgar Wachenheim’s Greenhaven Associates has the largest position in Boeing Co (NYSE:BA), worth close to $227.7 million, amounting to 4.3% of its total 13F portfolio. The second most bullish fund manager is AQR Capital Management, run by Cliff Asness, which holds a $178.9 million position; 0.3% of its 13F portfolio is allocated to the stock. Other peers with similar optimism encompass John Overdeck and David Siegel’s Two Sigma Advisors, and Phill Gross and Robert Atchinson’s Adage Capital Management.
Because Boeing Co (NYSE:BA) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of fund managers that elected to cut their entire stakes in the third quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group said goodbye to the biggest stake of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $68.9 million in stock. Stuart Powers’s fund, Hengistbury Investment Partners, also cut its stake, about $32.3 million worth of Boeing shares. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 1 fund in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Boeing Co (NYSE:BA). We will take a look at Toronto-Dominion Bank (USA) (NYSE:TD), QUALCOMM, Inc. (NASDAQ:QCOM), Diageo plc (ADR) (NYSE:DEO), and Reynolds American, Inc. (NYSE:RAI). All of these stocks’ market caps match BA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TD | 17 | 427673 | 0 |
| QCOM | 69 | 4640645 | 21 |
| DEO | 16 | 1095658 | -2 |
| RAI | 39 | 1069207 | -1 |
As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1.81 billion. That figure was approximately $1.23 billion in BA’s case. QUALCOMM, Inc. (NASDAQ:QCOM) is the most popular stock in this table. On the other hand Diageo plc (ADR) (NYSE:DEO) is the least popular one with only 16 bullish hedge fund positions. Boeing Co (NYSE:BA) 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 QCOM might be a better candidate to consider a long position.
Disclosure: none.
