Is Allegiant Travel Company (ALGT) a Good Buy?

The third-quarter stock market correction has turned out to resemble the situation observed during the Asian financial crisis of 1997. The two relatively short-lived corrections occurred at a time with stable interest rates, falling commodity markets, with strong-performing technology and healthcare sectors, and struggling energy sector. Similarly, the two corrections followed long periods without a correction, which had to come sooner or later and it did. Even so, several prominent hedge fund investors publicly asserted their bearish view on the current state of the U.S. equity markets, suggesting that they significantly cut their exposure to equities during the latest quarter. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on Allegiant Travel Company (NASDAQ:ALGT) in order to identify whether reputable and successful top money managers continue to believe in its potential.

Allegiant Travel Company (NASDAQ:ALGT) has seen an increase in support from the world’s most elite money managers in recent months. ALGT was in 26 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with ALGT holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Symetra Financial Corporation (NYSE:SYA), Assured Guaranty Ltd. (NYSE:AGO), and Highwoods Properties Inc (NYSE:HIW) to gather more data points.

To most investors, hedge funds are seen as unimportant, outdated financial tools of the past. While there are greater than 8000 funds with their doors open today, Our experts look at the aristocrats of this group, approximately 700 funds. These money managers manage the lion’s share of the smart money’s total capital, and by tracking their top picks, Insider Monkey has come up with a number of investment strategies that have historically beaten Mr. Market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Now, we’re going to go over the latest action encompassing Allegiant Travel Company (NASDAQ:ALGT).

How have hedgies been trading Allegiant Travel Company (NASDAQ:ALGT)?

Heading into Q4, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 63% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Allegiant Travel Company (NASDAQ:ALGT). Renaissance Technologies has a $270.6 million position in the stock, comprising 0.6% of its 13F portfolio. The second most bullish fund manager is Columbus Circle Investors, which holds a $31.5 million position; 0.3% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish include Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and D E Shaw.

With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Columbus Circle Investors created the most outsized position in Allegiant Travel Company (NASDAQ:ALGT). Columbus Circle Investors had $31.5 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $9.3 million investment in the stock during the quarter. The other funds with brand new ALGT positions are Dmitry Balyasny’s Balyasny Asset Management, Jane Mendillo’s Harvard Management Co, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Allegiant Travel Company (NASDAQ:ALGT) but similarly valued. We will take a look at Symetra Financial Corporation (NYSE:SYA), Assured Guaranty Ltd. (NYSE:AGO), Highwoods Properties Inc (NYSE:HIW), and Urban Outfitters, Inc. (NASDAQ:URBN). All of these stocks’ market caps are similar to ALGT’s market cap.

As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $319 million. That figure was $458 million in ALGT’s case. Assured Guaranty Ltd. (NYSE:AGO) is the most popular stock in this table. On the other hand Highwoods Properties Inc (NYSE:HIW) is the least popular one with only 9 bullish hedge fund positions. Allegiant Travel Company (NASDAQ:ALGT) 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 AGO might be a better candidate to consider a long position.