As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Sabre Corporation (NASDAQ:SABR).
Sabre Corporation (NASDAQ:SABR) shareholders have witnessed a decrease in activity from the world’s largest hedge funds recently. Sabre Corporation (NASDAQ:SABR) was in 40 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 46. There were 46 hedge funds in our database with SABR holdings at the end of December. Our calculations also showed that SABR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Larry Robbins of Glenview Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to take a look at the new hedge fund action regarding Sabre Corporation (NASDAQ:SABR).
Do Hedge Funds Think SABR Is A Good Stock To Buy Now?
At the end of March, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in SABR over the last 23 quarters. So, let’s check out 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 Sabre Corporation (NASDAQ:SABR), which was worth $224.8 million at the end of the fourth quarter. On the second spot was Fundsmith LLP which amassed $221.1 million worth of shares. Yiheng Capital, Contrarius Investment Management, and Citadel Investment Group 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 Collaborative Holdings Management allocated the biggest weight to Sabre Corporation (NASDAQ:SABR), around 16.36% of its 13F portfolio. Knighthead Capital is also relatively very bullish on the stock, designating 12.31 percent of its 13F equity portfolio to SABR.
Since Sabre Corporation (NASDAQ:SABR) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedgies who sold off their full holdings in the first quarter. Intriguingly, Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management dumped the biggest investment of all the hedgies monitored by Insider Monkey, worth close to $106.9 million in stock. Brian J. Higgins’s fund, King Street Capital, also sold off its stock, about $67.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 6 funds in the first quarter.
Let’s check out hedge fund activity in other stocks similar to Sabre Corporation (NASDAQ:SABR). These stocks are TeleTech Holdings, Inc. (NASDAQ:TTEC), nVent Electric plc (NYSE:NVT), MGIC Investment Corporation (NYSE:MTG), Hexcel Corporation (NYSE:HXL), UFP Industries, Inc. (NASDAQ:UFPI), Perspecta Inc. (NYSE:PRSP), and Hamilton Lane Incorporated (NASDAQ:HLNE). This group of stocks’ market valuations match SABR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TTEC | 10 | 55504 | 0 |
| NVT | 31 | 338555 | 1 |
| MTG | 28 | 268803 | 1 |
| HXL | 18 | 98420 | -7 |
| UFPI | 16 | 171550 | -3 |
| PRSP | 40 | 957808 | 3 |
| HLNE | 16 | 78897 | 2 |
| Average | 22.7 | 281362 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $281 million. That figure was $1281 million in SABR’s case. Perspecta Inc. (NYSE:PRSP) is the most popular stock in this table. On the other hand TeleTech Holdings, Inc. (NASDAQ:TTEC) is the least popular one with only 10 bullish hedge fund positions. Sabre Corporation (NASDAQ:SABR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SABR is 75.1. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately SABR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SABR were disappointed as the stock returned -11.1% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Sabre Corp (NASDAQ:SABR)
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Disclosure: None. This article was originally published at Insider Monkey.
