How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Spirit AeroSystems Holdings, Inc. (NYSE:SPR).
Is Spirit AeroSystems Holdings, Inc. (NYSE:SPR) a good investment right now? The best stock pickers were becoming hopeful. The number of long hedge fund bets increased by 3 in recent months. Spirit AeroSystems Holdings, Inc. (NYSE:SPR) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 50. Our calculations also showed that SPR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 35 hedge funds in our database with SPR positions at the end of the second quarter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s analyze the latest hedge fund action regarding Spirit AeroSystems Holdings, Inc. (NYSE:SPR).
Gavin Saitowitz of Prelude Capital
Do Hedge Funds Think SPR Is A Good Stock To Buy Now?
At the end of September, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. On the other hand, there were a total of 31 hedge funds with a bullish position in SPR a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Sculptor Capital held the most valuable stake in Spirit AeroSystems Holdings, Inc. (NYSE:SPR), which was worth $131.7 million at the end of the third quarter. On the second spot was Scopia Capital which amassed $124.2 million worth of shares. Redwood Capital Management, Maple Rock Capital, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Scopia Capital allocated the biggest weight to Spirit AeroSystems Holdings, Inc. (NYSE:SPR), around 13.41% of its 13F portfolio. Mountaineer Partners Management is also relatively very bullish on the stock, earmarking 7.96 percent of its 13F equity portfolio to SPR.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Hill City Capital, managed by Herbert Frazier, assembled the biggest position in Spirit AeroSystems Holdings, Inc. (NYSE:SPR). Hill City Capital had $21.9 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also made a $11 million investment in the stock during the quarter. The following funds were also among the new SPR investors: Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), Robert Vincent McHugh’s Jade Capital Advisors, and Robert Bishop’s Impala Asset Management.
Let’s also examine hedge fund activity in other stocks similar to Spirit AeroSystems Holdings, Inc. (NYSE:SPR). These stocks are New Relic Inc (NYSE:NEWR), Tripadvisor Inc (NASDAQ:TRIP), National Vision Holdings, Inc. (NASDAQ:EYE), Lancaster Colony Corporation (NASDAQ:LANC), Simpson Manufacturing Co, Inc. (NYSE:SSD), Shoals Technologies Group, Inc. (NASDAQ:SHLS), and Papa John’s International, Inc. (NASDAQ:PZZA). This group of stocks’ market caps are similar to SPR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NEWR | 30 | 1406588 | 1 |
| TRIP | 33 | 831284 | -3 |
| EYE | 16 | 397802 | -3 |
| LANC | 21 | 251251 | 3 |
| SSD | 19 | 177824 | 0 |
| SHLS | 13 | 63890 | 1 |
| PZZA | 33 | 744692 | 3 |
| Average | 23.6 | 553333 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $553 million. That figure was $759 million in SPR’s case. Tripadvisor Inc (NASDAQ:TRIP) is the most popular stock in this table. On the other hand Shoals Technologies Group, Inc. (NASDAQ:SHLS) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Spirit AeroSystems Holdings, Inc. (NYSE:SPR) is more popular among hedge funds. Our overall hedge fund sentiment score for SPR is 80.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately SPR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SPR were disappointed as the stock returned -14.3% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Spirit Aerosystems Holdings Inc. (NYSE:SPR)
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Disclosure: None. This article was originally published at Insider Monkey.
