Here Is What Hedge Funds Think About SkyWest, Inc. (SKYW)

The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards SkyWest, Inc. (NASDAQ:SKYW) .

SkyWest, Inc. (NASDAQ:SKYW) saw an increase in activity from the world’s largest hedge funds last quarter. At the end of September, there were 17 funds tracked by Insider Monkey bullish on SKYW, compared to 13 funds a quarter earlier. At the end of this article we will also compare SKYW to other stocks including Weis Markets, Inc. (NYSE:WMK), Cooper-Standard Holdings Inc (NYSE:CPS), and Ascena Retail Group Inc (NASDAQ:ASNA) to get a better sense of its popularity.

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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What does the smart money think about SkyWest, Inc. (NASDAQ:SKYW)?

Heading into the fourth quarter of 2016, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on SkyWest, Inc. (NASDAQ:SKYW), up by 31% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SKYW over the last five quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Jim Simons’ Renaissance Technologies holds the largest position in SkyWest, Inc. (NASDAQ:SKYW). Renaissance Technologies has a $18.1 million position in the stock. On Renaissance Technologies’s heels is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $14.6 million position. Some other members of the smart money with similar optimism comprise David Iben’s Kopernik Global Investors and Cliff Asness’ AQR Capital Management. We should note that Kopernik Global Investors is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Consequently, key hedge funds were breaking ground themselves. McKinley Capital Management assembled the biggest position in SkyWest, Inc. (NASDAQ:SKYW). McKinley Capital Management had $3.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Glenn Russell Dubin’s Highbridge Capital Management, Matthew Tewksbury’s Stevens Capital Management, and Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as SkyWest, Inc. (NASDAQ:SKYW) but similarly valued. These stocks are Weis Markets, Inc. (NYSE:WMK), Cooper-Standard Holdings Inc (NYSE:CPS), Ascena Retail Group Inc (NASDAQ:ASNA), and Forward Air Corporation (NASDAQ:FWRD). This group of stocks’ market valuations are similar to SKYW’s market valuation.

As you can see these stocks had an average of 18 funds with bullish positions and the average amount invested in these stocks was $204 million, which is higher than the $56 million figure in SKYW’s case. Ascena Retail Group Inc (NASDAQ:ASNA) is the most popular stock in this table, while Weis Markets, Inc. (NYSE:WMK) is the least popular one with only 11 bullish hedge fund positions. SkyWest, Inc. (NASDAQ:SKYW) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Ascena Retail Group Inc (NASDAQ:ASNA) might be a better candidate to consider taking a long position in.

Disclosure: None