Copa Holdings, S.A. (NYSE:CPA) has experienced a decrease in hedge fund interest lately.
According to most market participants, hedge funds are viewed as slow, outdated investment vehicles of years past. While there are more than 8000 funds trading today, we choose to focus on the upper echelon of this group, about 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total capital, and by monitoring their top stock picks, we have figured out a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed 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 23.3 percentage points in 8 months (see all of our picks from August).
Just as integral, bullish insider trading activity is a second way to parse down the marketplace. There are many incentives for a bullish insider to downsize shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” know where to look (learn more here).
With these “truths” under our belt, we’re going to take a gander at the recent action encompassing Copa Holdings, S.A. (NYSE:CPA).
How have hedgies been trading Copa Holdings, S.A. (NYSE:CPA)?
At Q1’s end, a total of 9 of the hedge funds we track were bullish in this stock, a change of -36% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially.
Of the funds we track, Farallon Capital, managed by Andrew Spokes, holds the biggest position in Copa Holdings, S.A. (NYSE:CPA). Farallon Capital has a $38.6 million position in the stock, comprising 0.8% of its 13F portfolio. On Farallon Capital’s heels is AQR Capital Management, managed by Cliff Asness, which held a $16.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions include Ken Griffin’s Citadel Investment Group, and David Costen Haley’s HBK Investments.
Because Copa Holdings, S.A. (NYSE:CPA) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of funds who sold off their entire stakes in Q1. At the top of the heap, Jeffrey Vinik’s Vinik Asset Management dumped the largest position of the “upper crust” of funds we track, valued at an estimated $4.9 million in stock.. Jim Simons’s fund, Renaissance Technologies, also sold off its stock, about $1.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 5 funds in Q1.
What have insiders been doing with Copa Holdings, S.A. (NYSE:CPA)?
Insider trading activity, especially when it’s bullish, is at its handiest when the company in question has experienced transactions within the past half-year. Over the latest 180-day time frame, Copa Holdings, S.A. (NYSE:CPA) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Copa Holdings, S.A. (NYSE:CPA). These stocks are JetBlue Airways Corporation (NASDAQ:JBLU), Ryanair Holdings plc (ADR) (NASDAQ:RYAAY), LATAM Airlines Group SA (ADR) (NYSE:LFL), Southwest Airlines Co. (NYSE:LUV), and Alaska Air Group, Inc. (NYSE:ALK). This group of stocks belong to the regional airlines industry and their market caps are closest to CPA’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| JetBlue Airways Corporation (NASDAQ:JBLU) | 17 | 0 | 2 |
| Ryanair Holdings plc (ADR) (NASDAQ:RYAAY) | 18 | 0 | 0 |
| LATAM Airlines Group SA (ADR) (NYSE:LFL) | 7 | 0 | 0 |
| Southwest Airlines Co. (NYSE:LUV) | 32 | 0 | 1 |
| Alaska Air Group, Inc. (NYSE:ALK) | 24 | 0 | 10 |
With the returns shown by the aforementioned studies, retail investors must always pay attention to hedge fund and insider trading activity, and Copa Holdings, S.A. (NYSE:CPA) is an important part of this process.
