After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards American Airlines Group Inc (NASDAQ:AAL).
Is American Airlines Group Inc (NASDAQ:AAL) an attractive stock to buy now? Hedge funds were turning less bullish. The number of long hedge fund bets dropped by 7 lately. American Airlines Group Inc (NASDAQ:AAL) was in 25 hedge funds’ portfolios at the end of June. The all time high for this statistic is 77. Our calculations also showed that AAL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 32 hedge funds in our database with AAL positions at the end of the first quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
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Do Hedge Funds Think AAL Is A Good Stock To Buy Now?
At the end of June, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from the previous quarter. By comparison, 47 hedge funds held shares or bullish call options in AAL a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in American Airlines Group Inc (NASDAQ:AAL), which was worth $168.6 million at the end of the second quarter. On the second spot was Two Sigma Advisors which amassed $166.4 million worth of shares. Alkeon Capital Management, Citadel Investment Group, and D E Shaw 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 Jade Capital Advisors allocated the biggest weight to American Airlines Group Inc (NASDAQ:AAL), around 2.94% of its 13F portfolio. Cartenna Capital is also relatively very bullish on the stock, designating 1.52 percent of its 13F equity portfolio to AAL.
Seeing as American Airlines Group Inc (NASDAQ:AAL) has experienced falling interest from hedge fund managers, it’s easy to see that there were a few money managers that elected to cut their full holdings heading into Q3. Interestingly, Josh Resnick’s Jericho Capital Asset Management dumped the largest position of the 750 funds tracked by Insider Monkey, worth close to $51 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dropped its stock, about $21.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 7 funds heading into Q3.
Let’s now review hedge fund activity in other stocks similar to American Airlines Group Inc (NASDAQ:AAL). These stocks are Centrais Eletricas Brasileiras SA (NYSE:EBR), UWM Holdings Corporation Class (NYSE:UWMC), Equity Lifestyle Properties, Inc. (NYSE:ELS), Advance Auto Parts, Inc. (NYSE:AAP), W.P. Carey Inc. (NYSE:WPC), Mohawk Industries, Inc. (NYSE:MHK), and Elastic N.V. (NYSE:ESTC). This group of stocks’ market values are similar to AAL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EBR | 5 | 3151 | 0 |
| UWMC | 20 | 66732 | 1 |
| ELS | 25 | 477660 | -4 |
| AAP | 34 | 849879 | -9 |
| WPC | 29 | 147455 | 6 |
| MHK | 44 | 1311640 | 8 |
| ESTC | 55 | 3062021 | 3 |
| Average | 30.3 | 845505 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.3 hedge funds with bullish positions and the average amount invested in these stocks was $846 million. That figure was $620 million in AAL’s case. Elastic N.V. (NYSE:ESTC) is the most popular stock in this table. On the other hand Centrais Eletricas Brasileiras SA (NYSE:EBR) is the least popular one with only 5 bullish hedge fund positions. American Airlines Group Inc (NASDAQ:AAL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AAL is 27.7. 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 through November 5th and surpassed the market again by 3.1 percentage points. Unfortunately AAL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AAL investors were disappointed as the stock returned 2.9% 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
