We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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 835 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 December 31st. In this article we look at what those investors think of SkyWest, Inc. (NASDAQ:SKYW).
SkyWest, Inc. (NASDAQ:SKYW) shareholders have witnessed a decrease in hedge fund sentiment recently. Our calculations also showed that SKYW isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
To most market participants, hedge funds are seen as slow, old financial vehicles of years past. While there are more than 8000 funds in operation at the moment, Our experts choose to focus on the upper echelon of this group, around 850 funds. It is estimated that this group of investors oversee bulk of the smart money’s total asset base, and by paying attention to their first-class investments, Insider Monkey has uncovered a few investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Ken Griffin of Citadel Investment Group
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to review the fresh hedge fund action regarding SkyWest, Inc. (NASDAQ:SKYW).
What does smart money think about SkyWest, Inc. (NASDAQ:SKYW)?
At Q4’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SKYW over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the largest position in SkyWest, Inc. (NASDAQ:SKYW). Renaissance Technologies has a $115.1 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is PAR Capital Management, led by Paul Reeder and Edward Shapiro, holding a $29.7 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Some other peers that hold long positions encompass Ken Griffin’s Citadel Investment Group, Paul Marshall and Ian Wace’s Marshall Wace LLP and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position PAR Capital Management allocated the biggest weight to SkyWest, Inc. (NASDAQ:SKYW), around 0.58% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, earmarking 0.26 percent of its 13F equity portfolio to SKYW.
Due to the fact that SkyWest, Inc. (NASDAQ:SKYW) has experienced falling interest from hedge fund managers, logic holds that there was a specific group of hedge funds that slashed their full holdings heading into Q4. At the top of the heap, Michael Gelband’s ExodusPoint Capital said goodbye to the largest position of all the hedgies followed by Insider Monkey, comprising about $0.4 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund cut about $0.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 1 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to SkyWest, Inc. (NASDAQ:SKYW). These stocks are Agios Pharmaceuticals Inc (NASDAQ:AGIO), Magnolia Oil & Gas Corporation (NASDAQ:MGY), LiveRamp Holdings, Inc. (NYSE:RAMP), and GW Pharmaceuticals plc (NASDAQ:GWPH). All of these stocks’ market caps resemble SKYW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGIO | 23 | 309793 | 6 |
| MGY | 18 | 141829 | 0 |
| RAMP | 20 | 176338 | 1 |
| GWPH | 24 | 366117 | -8 |
| Average | 21.25 | 248519 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $249 million. That figure was $179 million in SKYW’s case. GW Pharmaceuticals plc (NASDAQ:GWPH) is the most popular stock in this table. On the other hand Magnolia Oil & Gas Corporation (NASDAQ:MGY) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks SkyWest, Inc. (NASDAQ:SKYW) is even less popular than MGY. Hedge funds dodged a bullet by taking a bearish stance towards SKYW. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but managed to beat the market by 5.5 percentage points. Unfortunately SKYW wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SKYW investors were disappointed as the stock returned -60% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
