Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is AerCap Holdings N.V. (NYSE:AER) the right pick for your portfolio? The smart money is in a pessimistic mood. The number of long hedge fund bets were cut by 4 in recent months. At the end of this article we will also compare AER to other stocks including American Capital Agency Corp. (NASDAQ:AGNC), Vipshop Holdings Ltd – ADR (NYSE:VIPS), and E TRADE Financial Corporation (NASDAQ:ETFC) to get a better sense of its popularity.
Follow Aercap Holdings N.v. (NYSE:AER)
Follow Aercap Holdings N.v. (NYSE:AER)
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, let’s take a gander at the new action encompassing AerCap Holdings N.V. (NYSE:AER).
Hedge fund activity in AerCap Holdings N.V. (NYSE:AER)
At Q3’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, down 11% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Greenlight Capital, managed by David Einhorn, holds the most valuable position in AerCap Holdings N.V. (NYSE:AER). The fund reportedly has a $491.4 million position in the stock, comprising 9.4% of its 13F portfolio. On Greenlight Capital’s heels is Leon Cooperman of Omega Advisors, with a $156.3 million position; the fund has 4.8% of its 13F portfolio invested in the stock. Some other peers that hold long positions contain Jonathon Jacobson’s Highfields Capital Management, Scott McLellan’s Marble Arch Investments and Martin D. Sass’s MD Sass.
Due to the fact that AerCap Holdings N.V. (NYSE:AER) has witnessed a decline in interest from the smart money, we can see that there lies a certain “tier” of hedgies that elected to cut their full holdings last quarter. Intriguingly, Rob Citrone’s Discovery Capital Management dumped the largest investment of all the hedgies monitored by Insider Monkey, valued at an estimated $89.9 million in stock. Scott McLellan’s fund, Marble Arch Investments, also dropped its entire position, about $50.4 million worth of stock. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to AerCap Holdings N.V. (NYSE:AER). We will take a look at American Capital Agency Corp. (NASDAQ:AGNC), Vipshop Holdings Ltd – ADR (NYSE:VIPS), E TRADE Financial Corporation (NASDAQ:ETFC), and Diamondback Energy Inc (NASDAQ:FANG). This group of stocks’ market caps match AER’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGNC | 11 | 154784 | -8 |
| VIPS | 38 | 935685 | 13 |
| ETFC | 34 | 1081614 | -1 |
| FANG | 35 | 729727 | 1 |
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $725 million. That figure was an impressive $1.38 billion in AER’s case. Vipshop Holdings Ltd – ADR (NYSE:VIPS) is the most popular stock in this table. On the other hand American Capital Agency Corp. (NASDAQ:AGNC) is the least popular one with only 11 bullish hedge fund positions. AerCap Holdings N.V. (NYSE:AER) 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 VIPS might be a better candidate to consider a long position.
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