Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Sabre Corp (NASDAQ:SABR) from the perspective of those elite funds.
Sabre Corp (NASDAQ:SABR) investors should pay attention to a decrease in hedge fund interest of late. SABR was in 29 hedge funds’ portfolios at the end of the third quarter of 2016. There were 36 hedge funds in our database with SABR holdings 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 Foot Locker, Inc. (NYSE:FL), InterContinental Hotels Group PLC (ADR) (NYSE:IHG), and W.R. Berkley Corporation (NYSE:WRB) to gather more data points.
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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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How have hedgies been trading Sabre Corp (NASDAQ:SABR)?
Heading into the fourth quarter of 2016, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a decline of -19% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Jim Davidson and Dave Roux and Glenn Hutchins’ Silver Lake Partners has the most valuable position in Sabre Corp (NASDAQ:SABR), worth close to $845.9 million, accounting for 17.5% of its total 13F portfolio. The second largest stake is held by Maverick Capital, managed by Lee Ainslie, which holds a $602.2 million position; 7.1% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions include Bain Capital’s Brookside Capital, James Crichton’s Hitchwood Capital Management and Greg Poole’s Echo Street Capital Management.
Since Sabre Corp (NASDAQ:SABR) has experienced declining sentiment from the smart money, we can see that there were a few fund managers that decided to sell off their full holdings in the third quarter. Interestingly, Matt Sirovich and Jeremy Mindich’s Scopia Capital sold off the biggest investment of the “upper crust” of funds tracked by Insider Monkey, totaling close to $183.7 million in stock. D. E. Shaw’s fund, D E Shaw, also dropped its stock, about $43.6 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 7 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Sabre Corp (NASDAQ:SABR) but similarly valued. We will take a look at Foot Locker, Inc. (NYSE:FL), InterContinental Hotels Group PLC (ADR) (NYSE:IHG), W.R. Berkley Corporation (NYSE:WRB), and Ryanair Holdings plc (ADR) (NASDAQ:RYAAY). This group of stocks’ market valuations resemble SABR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FL | 29 | 1018572 | -2 |
| IHG | 6 | 8885 | -1 |
| WRB | 13 | 554662 | -5 |
| RYAAY | 24 | 474835 | 3 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $514 million. That figure was $1.95 billion in SABR’s case. Foot Locker, Inc. (NYSE:FL) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (ADR) (NYSE:IHG) is the least popular one with only 6 bullish hedge fund positions. Sabre Corp (NASDAQ:SABR) 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 FL might be a better candidate to consider a long position.
Disclosure: None
