Is The Boeing Company (NYSE:BA) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
The Boeing Company (NYSE:BA) has experienced a decrease in support from the world’s most elite money managers in recent months. Our calculations also showed that BA currently ranks 28th among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are a large number of metrics market participants use to size up stocks. Two of the less utilized metrics are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace the broader indices by a solid margin (see the details here).
Phill Gross of Adage 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 read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned nearly 50% despite the large losses in the market since our recommendation. Keeping this in mind let’s take a glance at the key hedge fund action regarding The Boeing Company (NYSE:BA).
What have hedge funds been doing with The Boeing Company (NYSE:BA)?
Heading into the first quarter of 2020, a total of 82 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -1% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in BA over the last 18 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Ken Griffin’s Citadel Investment Group has the biggest call position in The Boeing Company (NYSE:BA), worth close to $651.7 million, amounting to 0.3% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $318.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism consist of Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Panayotis Takis Sparaggis’s Alkeon Capital Management. In terms of the portfolio weights assigned to each position Hengistbury Investment Partners allocated the biggest weight to The Boeing Company (NYSE:BA), around 14.74% of its 13F portfolio. Mountaineer Partners Management is also relatively very bullish on the stock, designating 7.8 percent of its 13F equity portfolio to BA.
Because The Boeing Company (NYSE:BA) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of fund managers who were dropping their full holdings last quarter. At the top of the heap, Andreas Halvorsen’s Viking Global dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, valued at close to $854.8 million in stock. John Smith Clark’s fund, Southpoint Capital Advisors, also said goodbye to its stock, about $152.2 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to The Boeing Company (NYSE:BA). These stocks are Citigroup Inc. (NYSE:C), China Mobile Limited (NYSE:CHL), Oracle Corporation (NYSE:ORCL), and SAP SE (NYSE:SAP). This group of stocks’ market values match BA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| C | 98 | 11733711 | -3 |
| CHL | 12 | 386065 | 0 |
| ORCL | 59 | 3719807 | 3 |
| SAP | 16 | 1763846 | -4 |
| Average | 46.25 | 4400857 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.25 hedge funds with bullish positions and the average amount invested in these stocks was $4401 million. That figure was $2856 million in BA’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand China Mobile Limited (NYSE:CHL) is the least popular one with only 12 bullish hedge fund positions. The Boeing Company (NYSE:BA) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks also gained 0.1% in 2020 through March 2nd and beat the market by 4.1 percentage points. Unfortunately BA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BA were disappointed as the stock returned -10.7% 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
