Is ALK Stock A Buy or Sell?

With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was Alaska Air Group, Inc. (NYSE:ALK).

Is ALK stock a buy or sell? Alaska Air Group, Inc. (NYSE:ALK) investors should be aware of an increase in enthusiasm from smart money lately. Alaska Air Group, Inc. (NYSE:ALK) was in 35 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 42. Our calculations also showed that ALK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Paul Reeder of PAR Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s check out the latest hedge fund action regarding Alaska Air Group, Inc. (NYSE:ALK).

Do Hedge Funds Think ALK Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the third quarter of 2020. By comparison, 39 hedge funds held shares or bullish call options in ALK a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, PAR Capital Management, managed by Paul Reeder and Edward Shapiro, holds the most valuable position in Alaska Air Group, Inc. (NYSE:ALK). PAR Capital Management has a $146.2 million position in the stock, comprising 4.3% of its 13F portfolio. Coming in second is Diamond Hill Capital, managed by Ric Dillon, which holds a $87.9 million position; 0.4% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism include Ken Griffin’s Citadel Investment Group, Dmitry Balyasny’s Balyasny Asset Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position 1060 Capital Management allocated the biggest weight to Alaska Air Group, Inc. (NYSE:ALK), around 7.15% of its 13F portfolio. PAR Capital Management is also relatively very bullish on the stock, dishing out 4.26 percent of its 13F equity portfolio to ALK.

As one would reasonably expect, specific money managers have jumped into Alaska Air Group, Inc. (NYSE:ALK) headfirst. Interval Partners, managed by Gregg Moskowitz, created the most outsized position in Alaska Air Group, Inc. (NYSE:ALK). Interval Partners had $20.1 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also made a $9.8 million investment in the stock during the quarter. The following funds were also among the new ALK investors: George Soros’s Soros Fund Management, Javier Velazquez’s Albar Capital, and Ben Jacobs’s Anomaly Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Alaska Air Group, Inc. (NYSE:ALK) but similarly valued. We will take a look at Nutanix, Inc. (NASDAQ:NTNX), Prosperity Bancshares, Inc. (NYSE:PB), Kohl’s Corporation (NYSE:KSS), Rexford Industrial Realty Inc (NYSE:REXR), Jabil Inc. (NYSE:JBL), OGE Energy Corp. (NYSE:OGE), and Performance Food Group Company (NYSE:PFGC). All of these stocks’ market caps are closest to ALK’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $443 million. That figure was $553 million in ALK’s case. Kohl’s Corporation (NYSE:KSS) is the most popular stock in this table. On the other hand Prosperity Bancshares, Inc. (NYSE:PB) is the least popular one with only 16 bullish hedge fund positions. Alaska Air Group, Inc. (NYSE:ALK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ALK is 70.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on ALK as the stock returned 33.6% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.