Do Hedge Funds Love SkyWest, Inc. (SKYW)?

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 September 30, so let’s proceed with the discussion of the hedge fund sentiment on SkyWest, Inc. (NASDAQ:SKYW).

SkyWest, Inc. (NASDAQ:SKYW) was in 17 hedge funds’ portfolios at the end of September. SKYW investors should pay attention to an increase in hedge fund sentiment in recent months. There were 11 hedge funds in our database with SKYW positions at the end of the previous quarter. 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 Badger Meter, Inc. (NYSE:BMI), Irsa Inversiones y Rprsntcins SA (ADR) (NYSE:IRS), and Ocwen Financial Corporation (NYSE:OCN) to gather more data points.

According to most shareholders, hedge funds are seen as worthless, outdated financial tools of years past. While there are more than 8000 funds in operation at present, We choose to focus on the masters of this group, approximately 700 funds. It is estimated that this group of investors control most of all hedge funds’ total capital, and by keeping track of their inimitable equity investments, Insider Monkey has discovered a number of investment strategies that have historically outpaced the market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, let’s review the new action surrounding SkyWest, Inc. (NASDAQ:SKYW).

What does the smart money think about SkyWest, Inc. (NASDAQ:SKYW)?

Heading into Q4, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a surge of 55% from the second quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, David Iben’s Kopernik Global Investors has the largest position in SkyWest, Inc. (NASDAQ:SKYW), worth close to $44.5 million, amounting to 9.3% of its total 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $10.5 million position; less than 0.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism include Ken Griffin’s Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Jim Simons’s Renaissance Technologies.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the biggest position in SkyWest, Inc. (NASDAQ:SKYW). As reported in its latest 13F filing, the fund had $10.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $7 million position during the quarter. The other funds with brand new SKYW positions are Richard Driehaus’s Driehaus Capital, Glenn Russell Dubin’s Highbridge Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s go over hedge fund activity in other stocks similar to SkyWest, Inc. (NASDAQ:SKYW). We will take a look at Badger Meter, Inc. (NYSE:BMI), Irsa Inversiones y Rprsntcins SA (ADR) (NYSE:IRS), Ocwen Financial Corporation (NYSE:OCN), and Theravance Inc (NASDAQ:THRX). All of these stocks’ market caps resemble SKYW’s market cap.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $192 million. That figure was just $94 million in SKYW’s case. Ocwen Financial Corporation (NYSE:OCN) is the most popular stock in this table. On the other hand Badger Meter, Inc. (NYSE:BMI) is the least popular one with only 5 bullish hedge fund positions. SkyWest, Inc. (NASDAQ:SKYW) 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 OCN might be a better candidate to consider a long position.