Hedge Funds Are Crazy About SkyWest, Inc. (SKYW)

Is SkyWest, Inc. (NASDAQ:SKYW) an outstanding investment today? Investors who are in the know are becoming more confident. The number of long hedge fund positions moved up by 3 recently.

If you’d ask most traders, hedge funds are seen as worthless, old financial tools of the past. While there are over 8000 funds trading at present, we look at the leaders of this group, close to 450 funds. It is widely believed that this group oversees the majority of all hedge funds’ total asset base, and by keeping an eye on their top equity investments, we have uncovered a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per 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 trumped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Equally as key, bullish insider trading activity is a second way to parse down the marketplace. There are a number of incentives for a corporate insider to sell shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this tactic if shareholders understand where to look (learn more here).

Keeping this in mind, we’re going to take a gander at the key action regarding SkyWest, Inc. (NASDAQ:SKYW).

Hedge fund activity in SkyWest, Inc. (NASDAQ:SKYW)

In preparation for this year, a total of 11 of the hedge funds we track were bullish in this stock, a change of 38% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes significantly.

Of the funds we track, Jeffrey Vinik’s Vinik Asset Management had the biggest position in SkyWest, Inc. (NASDAQ:SKYW), worth close to $22.1 million, comprising 0.6% of its total 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which held a $3.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies and Joel Greenblatt’s Gotham Asset Management.

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Wexford Capital, managed by Charles Davidson, established the largest position in SkyWest, Inc. (NASDAQ:SKYW). Wexford Capital had 1 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also made a $0.4 million investment in the stock during the quarter. The only other fund with a brand new SKYW position is Mike Vranos’s Ellington.

How have insiders been trading SkyWest, Inc. (NASDAQ:SKYW)?

Insider purchases made by high-level executives is best served when the company in focus has experienced transactions within the past half-year. Over the last 180-day time frame, SkyWest, Inc. (NASDAQ:SKYW) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to SkyWest, Inc. (NASDAQ:SKYW). These stocks are JetBlue Airways Corporation (NASDAQ:JBLU), Allegiant Travel Company (NASDAQ:ALGT), Gol Linhas Aereas Inteligentes SA (ADR) (NYSE:GOL), and Republic Airways Holdings Inc. (NASDAQ:RJET). This group of stocks are in the regional airlines industry and their market caps resemble SKYW’s market cap.