Was The Smart Money Right About Spirit Airlines (SAVE)?

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 Spirit Airlines Incorporated (NYSE:SAVE).

Spirit Airlines Incorporated (NYSE:SAVE) investors should be aware of an increase in support from the world’s most elite money managers lately. Spirit Airlines Incorporated (NYSE:SAVE) was in 29 hedge funds’ portfolios at the end of June. The all time high for this statistic is 39. There were 24 hedge funds in our database with SAVE holdings at the end of March. Our calculations also showed that SAVE isn’t among the 30 most popular stocks among hedge funds (click for Q2 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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

John Overdeck of Two Sigma Advisors

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 are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. With all of this in mind let’s review the key hedge fund action surrounding Spirit Airlines Incorporated (NYSE:SAVE).

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

At the end of June, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SAVE over the last 24 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Among these funds, Two Sigma Advisors held the most valuable stake in Spirit Airlines Incorporated (NYSE:SAVE), which was worth $54.8 million at the end of the second quarter. On the second spot was PAR Capital Management which amassed $42.6 million worth of shares. Citadel Investment Group, Renaissance Technologies, and Driehaus Capital 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 Sonic Capital allocated the biggest weight to Spirit Airlines Incorporated (NYSE:SAVE), around 6.06% of its 13F portfolio. Teewinot Capital Advisers is also relatively very bullish on the stock, dishing out 1.6 percent of its 13F equity portfolio to SAVE.

Consequently, key hedge funds were breaking ground themselves. Renaissance Technologies, created the biggest position in Spirit Airlines Incorporated (NYSE:SAVE). Renaissance Technologies had $16 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $11.6 million position during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Noam Gottesman’s GLG Partners, and Robert Vincent McHugh’s Jade Capital Advisors.

Let’s also examine hedge fund activity in other stocks similar to Spirit Airlines Incorporated (NYSE:SAVE). We will take a look at VNET Group, Inc. (NASDAQ:VNET), Clearway Energy, Inc. (NYSE:CWEN), Welbilt, Inc. (NYSE:WBT), AAON, Inc. (NASDAQ:AAON), Insmed Incorporated (NASDAQ:INSM), Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE), and Vishay Intertechnology, Inc. (NYSE:VSH). This group of stocks’ market values are similar to SAVE’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $415 million. That figure was $248 million in SAVE’s case. Welbilt, Inc. (NYSE:WBT) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 17 bullish hedge fund positions. Spirit Airlines Incorporated (NYSE:SAVE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SAVE is 54.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 29.6% in 2021 through November 5th and beat the market again by 3.1 percentage points. Unfortunately SAVE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SAVE were disappointed as the stock returned -17.8% since the end of June (through 11/5) 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 many of these stocks already outperformed the market since 2019.

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