Hedge Funds Are Buying Spirit AeroSystems Holdings, Inc. (SPR)

Is Spirit AeroSystems Holdings, Inc. (NYSE:SPR) an attractive investment now? Prominent investors are in a bullish mood. The number of bullish hedge fund bets inched up by 4 lately.

To most market participants, hedge funds are seen as slow, old investment tools of yesteryear. While there are more than 8000 funds in operation today, we at Insider Monkey hone in on the bigwigs of this club, around 450 funds. It is estimated that this group oversees the majority of the smart money’s total capital, and by monitoring their top investments, we have determined a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as important, bullish insider trading activity is a second way to parse down the financial markets. As the old adage goes: there are plenty of stimuli for an executive to cut shares of his or her company, but just one, very clear reason why they would buy. Various empirical studies have demonstrated the useful potential of this tactic if piggybackers know where to look (learn more here).

Consequently, we’re going to take a glance at the recent action surrounding Spirit AeroSystems Holdings, Inc. (NYSE:SPR).

Hedge fund activity in Spirit AeroSystems Holdings, Inc. (NYSE:SPR)

At the end of the first quarter, a total of 32 of the hedge funds we track held long positions in this stock, a change of 14% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially.

When looking at the hedgies we track, Matt Sirovich and Jeremy Mindich’s Scopia Capital had the most valuable position in Spirit AeroSystems Holdings, Inc. (NYSE:SPR), worth close to $351.9 million, accounting for 12.2% of its total 13F portfolio. Sitting at the No. 2 spot is William B. Gray of Orbis Investment Management, with a $128.9 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Jeffrey Altman’s Owl Creek Asset Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Jim Simons’s Renaissance Technologies.

As one would reasonably expect, key money managers have jumped into Spirit AeroSystems Holdings, Inc. (NYSE:SPR) headfirst. Owl Creek Asset Management, managed by Jeffrey Altman, established the most outsized position in Spirit AeroSystems Holdings, Inc. (NYSE:SPR). Owl Creek Asset Management had 87.4 million invested in the company at the end of the quarter. David Einhorn’s Greenlight Capital also made a $31.4 million investment in the stock during the quarter. The other funds with brand new SPR positions are Anthony Bozza’s Lakewood Capital Management, Michael Blitzer’s Kingstown Capital Management, and Israel Englander’s Catapult Capital Management.

What have insiders been doing with Spirit AeroSystems Holdings, Inc. (NYSE:SPR)?

Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has seen transactions within the past six months. Over the latest 180-day time period, Spirit AeroSystems Holdings, Inc. (NYSE:SPR) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Spirit AeroSystems Holdings, Inc. (NYSE:SPR). These stocks are Alliant Techsystems Inc. (NYSE:ATK), Teledyne Technologies Incorporated (NYSE:TDY), Hexcel Corporation (NYSE:HXL), and Huntington Ingalls Industries Inc (NYSE:HII). All of these stocks are in the aerospace/defense products & services industry and their market caps are similar to SPR’s market cap.

With the results demonstrated by the aforementioned studies, retail investors must always pay attention to hedge fund and insider trading activity, and Spirit AeroSystems Holdings, Inc. (NYSE:SPR) is an important part of this process.

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