Were Hedge Funds Illusioned With The Boeing Company (BA)?

Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards The Boeing Company (NYSE:BA) at the end of the third quarter and determine whether the smart money was really smart about this stock.

The Boeing Company (NYSE:BA) has seen a decrease in hedge fund interest lately. The Boeing Company (NYSE:BA) was in 50 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 83. There were 59 hedge funds in our database with BA positions at the end of the second quarter. Our calculations also showed that BA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. With all of this in mind we’re going to take a gander at the key hedge fund action surrounding The Boeing Company (NYSE:BA).

Matthew Halbower of Pentwater Capital

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

At the end of September, a total of 50 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. On the other hand, there were a total of 43 hedge funds with a bullish position in BA a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Among these funds, Citadel Investment Group held the most valuable stake in The Boeing Company (NYSE:BA), which was worth $1935.4 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $329.6 million worth of shares. D E Shaw, Millennium Management, and Adage Capital Management 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 Symmetry Peak Management allocated the biggest weight to The Boeing Company (NYSE:BA), around 8.17% of its 13F portfolio. Heard Capital is also relatively very bullish on the stock, designating 5 percent of its 13F equity portfolio to BA.

Since The Boeing Company (NYSE:BA) has witnessed falling interest from the smart money, it’s easy to see that there was a specific group of hedgies that elected to cut their full holdings in the third quarter. Intriguingly, Hari Hariharan’s NWI Management dropped the largest stake of all the hedgies followed by Insider Monkey, totaling about $59.9 million in stock. Bill Miller’s fund, Miller Value Partners, also dumped its stock, about $48.2 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 9 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to The Boeing Company (NYSE:BA). These stocks are Union Pacific Corporation (NYSE:UNP), BlackRock, Inc. (NYSE:BLK), The Goldman Sachs Group, Inc. (NYSE:GS), TotalEnergies SE (NYSE:TTE), Advanced Micro Devices, Inc. (NASDAQ:AMD), International Business Machines Corp. (NYSE:IBM), and ServiceNow Inc (NYSE:NOW). This group of stocks’ market caps resemble BA’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 55.7 hedge funds with bullish positions and the average amount invested in these stocks was $3859 million. That figure was $1431 million in BA’s case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand TotalEnergies SE (NYSE:TTE) is the least popular one with only 16 bullish hedge fund positions. The Boeing Company (NYSE:BA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BA is 38. 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 negative signal and 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 and surpassed the market again by 3.6 percentage points. Unfortunately, BA wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BA investors were disappointed as the stock returned -9% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.

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