Hedge Funds See Choppy Skies Ahead for JetBlue Airways Corporation (JBLU)

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in JetBlue Airways Corporation (NASDAQ:JBLU)? The smart money sentiment can provide an answer to this question.

Is JetBlue Airways Corporation (NASDAQ:JBLU) ready to rally soon? Investors who are in the know are reducing their bets on the stock. The number of long hedge fund positions went down by 6 lately. JBLU was in 32 hedge funds’ portfolios at the end of September. There were 38 hedge funds in our database with JBLU 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 Post Holdings Inc (NYSE:POST), Calpine Corporation (NYSE:CPN), and Polaris Industries Inc. (NYSE:PII) to gather more data points.

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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Keeping this in mind, we’re going to take a look at the fresh action regarding JetBlue Airways Corporation (NASDAQ:JBLU).

What have hedge funds been doing with JetBlue Airways Corporation (NASDAQ:JBLU)?

Heading into the fourth quarter of 2016, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 16% fall from the previous quarter. Hedge fund ownership of the stock has been volatile for several quarters, shifting between positive and negative. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the number one position in JetBlue Airways Corporation (NASDAQ:JBLU). Renaissance Technologies has a $116.1 million position in the stock. On Renaissance Technologies’s heels is AQR Capital Management, led by Cliff Asness, holding a $64 million position. Other professional money managers with similar optimism include Paul Reeder and Edward Shapiro’s PAR Capital Management, Hari Hariharan’s NWI Management and Gregg Moskowitz’s Interval Partners.

Since JetBlue Airways Corporation (NASDAQ:JBLU) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there were a few hedge funds who sold off their full holdings heading into Q4. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the largest investment of all the hedgies watched by Insider Monkey, totaling about $28 million in stock, and Robert Polak’s Anchor Bolt Capital was right behind this move, as the fund sold off about $21.5 million worth of shares. These moves are important to note, as total hedge fund interest fell by 6 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to JetBlue Airways Corporation (NASDAQ:JBLU). These stocks are Post Holdings Inc (NYSE:POST), Calpine Corporation (NYSE:CPN), Polaris Industries Inc. (NYSE:PII), and Carlyle Group LP (NASDAQ:CG). This group of stocks’ market caps are closest to JBLU’s market cap.

As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $639 million. That figure was $487 million in JBLU’s case. Post Holdings Inc (NYSE:POST) is the most popular stock in this table. On the other hand Carlyle Group LP (NASDAQ:CG) is the least popular one with only 11 bullish hedge fund positions. JetBlue Airways Corporation (NASDAQ:JBLU) 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 POST might be a better candidate to consider a long position.

Disclosure: None