The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Allegiant Travel Company (NASDAQ:ALGT) and determine whether the smart money was really smart about this stock.
Is Allegiant Travel Company (NASDAQ:ALGT) a superb investment now? Investors who are in the know were getting more bullish. The number of bullish hedge fund positions improved by 4 in recent months. Allegiant Travel Company (NASDAQ:ALGT) was in 23 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 26. Our calculations also showed that ALGT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 19 hedge funds in our database with ALGT positions at the end of the first quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Paul Reeder of PAR Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers after its stock price crashed. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now let’s check out the latest hedge fund action encompassing Allegiant Travel Company (NASDAQ:ALGT).
How have hedgies been trading Allegiant Travel Company (NASDAQ:ALGT)?
At the end of the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in ALGT a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, PAR Capital Management held the most valuable stake in Allegiant Travel Company (NASDAQ:ALGT), which was worth $138.8 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $50.9 million worth of shares. Diamond Hill Capital, Woodson Capital Management, and Ancient Art (Teton Capital) 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 Mountain Lake Investment Management allocated the biggest weight to Allegiant Travel Company (NASDAQ:ALGT), around 8.13% of its 13F portfolio. Billings Capital Management is also relatively very bullish on the stock, dishing out 7.51 percent of its 13F equity portfolio to ALGT.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Woodson Capital Management, managed by James Woodson Davis, initiated the largest position in Allegiant Travel Company (NASDAQ:ALGT). Woodson Capital Management had $13.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $11.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Chuck Royce’s Royce & Associates, Eric F. Billings’s Billings Capital Management, and Greg Eisner’s Engineers Gate Manager.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Allegiant Travel Company (NASDAQ:ALGT) but similarly valued. These stocks are The Simply Good Foods Company (NASDAQ:SMPL), SJW Group (NYSE:SJW), Liberty Latin America Ltd. (NASDAQ:LILA), Cavco Industries, Inc. (NASDAQ:CVCO), AMTD International Inc. (NYSE:HKIB), PRA Group, Inc. (NASDAQ:PRAA), and Dana Incorporated (NYSE:DAN). This group of stocks’ market values match ALGT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SMPL | 26 | 138560 | 7 |
| SJW | 11 | 84916 | 1 |
| LILA | 15 | 102005 | 3 |
| CVCO | 23 | 170774 | 3 |
| HKIB | 1 | 14188 | 0 |
| PRAA | 13 | 70871 | -1 |
| DAN | 25 | 185695 | -3 |
| Average | 16.3 | 109573 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.3 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $335 million in ALGT’s case. The Simply Good Foods Company (NASDAQ:SMPL) is the most popular stock in this table. On the other hand AMTD International Inc. (NYSE:HKIB) is the least popular one with only 1 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 79.5. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. Hedge funds were also right about betting on ALGT, though not to the same extent, as the stock returned 9.7% in Q3 and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
