Hedge Funds Have Never Been More Bullish On SkyWest, Inc. (SKYW)

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 821 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 March 31st, a week after the market trough. In this article we look at what those investors think of SkyWest, Inc. (NASDAQ:SKYW).

Is SkyWest, Inc. (NASDAQ:SKYW) a buy here? Prominent investors are buying. The number of long hedge fund positions improved by 3 recently. Our calculations also showed that SKYW isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Reeder of PAR Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s check out the recent hedge fund action encompassing SkyWest, Inc. (NASDAQ:SKYW).

How are hedge funds trading SkyWest, Inc. (NASDAQ:SKYW)?

Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in SKYW a year ago. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of SkyWest, Inc. (NASDAQ:SKYW), with a stake worth $36.1 million reported as of the end of September. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $11.2 million. Citadel Investment Group, PAR Capital Management, and D E Shaw 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 PAR Capital Management allocated the biggest weight to SkyWest, Inc. (NASDAQ:SKYW), around 0.34% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, designating 0.33 percent of its 13F equity portfolio to SKYW.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. D E Shaw, managed by D. E. Shaw, initiated the largest position in SkyWest, Inc. (NASDAQ:SKYW). D E Shaw had $4.2 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $2.6 million position during the quarter. The other funds with brand new SKYW positions are Jeffrey Altman’s Owl Creek Asset Management, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, and Benjamin A. Smith’s Laurion Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as SkyWest, Inc. (NASDAQ:SKYW) but similarly valued. We will take a look at Herman Miller, Inc. (NASDAQ:MLHR), Evoqua Water Technologies Corp. (NYSE:AQUA), TowneBank (NASDAQ:TOWN), and Four Corners Property Trust, Inc. (NYSE:FCPT). All of these stocks’ market caps are similar to SKYW’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $79 million. That figure was $84 million in SKYW’s case. Evoqua Water Technologies Corp. (NYSE:AQUA) is the most popular stock in this table. On the other hand TowneBank (NASDAQ:TOWN) is the least popular one with only 4 bullish hedge fund positions. SkyWest, Inc. (NASDAQ:SKYW) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on SKYW, though not to the same extent, as the stock returned 24.7% during the first two months and twenty two days of the second quarter and outperformed the market as well.

Disclosure: None. This article was originally published at Insider Monkey.