Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Delta Air Lines, Inc. (NYSE:DAL).
Is Delta Air Lines (DAL) stock a buy or sell? Prominent investors were becoming hopeful. The number of long hedge fund positions rose by 15 in recent months. Delta Air Lines, Inc. (NYSE:DAL) was in 58 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 109. Our calculations also showed that DAL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 43 hedge funds in our database with DAL holdings at the end of September.
Today there are many indicators market participants use to assess stocks. Some of the most under-the-radar indicators are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can trounce the broader indices by a very impressive margin (see the details here).
Paul Reeder of PAR Capital Management
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Do Hedge Funds Think DAL Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DAL over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Lansdowne Partners, managed by Suzi Nutton (CEO), holds the biggest position in Delta Air Lines, Inc. (NYSE:DAL). Lansdowne Partners has a $154.4 million position in the stock, comprising 5% of its 13F portfolio. Coming in second is PAR Capital Management, led by Paul Reeder and Edward Shapiro, holding a $140.7 million position; the fund has 4.1% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Robert Henry Lynch’s Aristeia Capital, Ken Griffin’s Citadel Investment Group and Jeremy Hosking’s Hosking Partners. In terms of the portfolio weights assigned to each position Covalent Capital Partners allocated the biggest weight to Delta Air Lines, Inc. (NYSE:DAL), around 6.02% of its 13F portfolio. Lansdowne Partners is also relatively very bullish on the stock, earmarking 5 percent of its 13F equity portfolio to DAL.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Jericho Capital Asset Management, managed by Josh Resnick, assembled the most outsized position in Delta Air Lines, Inc. (NYSE:DAL). Jericho Capital Asset Management had $49.5 million invested in the company at the end of the quarter. Renaissance Technologies also made a $40.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Doug Silverman and Alexander Klabin’s Senator Investment Group, Ryan Caldwell’s Chiron Investment Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s check out hedge fund activity in other stocks similar to Delta Air Lines, Inc. (NYSE:DAL). We will take a look at Suncor Energy Inc. (NYSE:SU), TELUS Corporation (NYSE:TU), McCormick & Company, Incorporated (NYSE:MKC), The Clorox Company (NYSE:CLX), Dollar Tree, Inc. (NASDAQ:DLTR), Skyworks Solutions Inc (NASDAQ:SWKS), and First Republic Bank (NYSE:FRC). This group of stocks’ market valuations match DAL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SU | 25 | 686120 | 3 |
| TU | 14 | 183122 | 2 |
| MKC | 36 | 1880232 | -1 |
| CLX | 39 | 1653099 | 0 |
| DLTR | 53 | 1977339 | 3 |
| SWKS | 41 | 763595 | -9 |
| FRC | 34 | 1270095 | 3 |
| Average | 34.6 | 1201943 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.6 hedge funds with bullish positions and the average amount invested in these stocks was $1202 million. That figure was $1059 million in DAL’s case. Dollar Tree, Inc. (NASDAQ:DLTR) is the most popular stock in this table. On the other hand TELUS Corporation (NYSE:TU) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Delta Air Lines, Inc. (NYSE:DAL) is more popular among hedge funds. Our overall hedge fund sentiment score for DAL is 76. 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 returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on DAL as the stock returned 21.9% since the end of December (through 3/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
