Were Hedge Funds Right About The Boeing Company (BA)?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded The Boeing Company (NYSE:BA) based on those filings.

Hedge fund interest in The Boeing Company (NYSE:BA) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that BA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Amgen, Inc. (NASDAQ:AMGN), The Charles Schwab Corporation (NYSE:SCHW), and Lowe’s Companies, Inc. (NYSE:LOW) to gather more data points.

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.

Charles Clough of Clough Capital Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. We check out articles like Warren Buffett’s 3 money saving tips that provide inflation and volatility hedges. 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 we’re going to take a look at the recent hedge fund action surrounding The Boeing Company (NYSE:BA).

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

At the end of June, a total of 59 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BA over the last 24 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in The Boeing Company (NYSE:BA). Citadel Investment Group has a $1.8039 billion call position in the stock, comprising 0.4% of its 13F portfolio. On Citadel Investment Group’s heels is Citadel Investment Group, led by Ken Griffin, holding a $361.2 million position; 0.1% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish include D. E. Shaw’s D E Shaw, Phill Gross and Robert Atchinson’s Adage Capital Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Heard Capital allocated the biggest weight to The Boeing Company (NYSE:BA), around 4.92% of its 13F portfolio. Columbus Hill Capital Management is also relatively very bullish on the stock, setting aside 4.45 percent of its 13F equity portfolio to BA.

Judging by the fact that The Boeing Company (NYSE:BA) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few funds that slashed their positions entirely last quarter. Interestingly, Benjamin A. Smith’s Laurion Capital Management cut the biggest investment of all the hedgies followed by Insider Monkey, valued at close to $88 million in stock. Steve Cohen’s fund, Point72 Asset Management, also sold off its stock, about $38.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to The Boeing Company (NYSE:BA). These stocks are Amgen, Inc. (NASDAQ:AMGN), The Charles Schwab Corporation (NYSE:SCHW), Lowe’s Companies, Inc. (NYSE:LOW), Rio Tinto Group (NYSE:RIO), HDFC Bank Limited (NYSE:HDB), Intuit Inc. (NASDAQ:INTU), and BlackRock, Inc. (NYSE:BLK). 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 51.6 hedge funds with bullish positions and the average amount invested in these stocks was $3041 million. That figure was $1369 million in BA’s case. The Charles Schwab Corporation (NYSE:SCHW) is the most popular stock in this table. On the other hand Rio Tinto Group (NYSE:RIO) is the least popular one with only 21 bullish hedge fund positions. The Boeing Company (NYSE:BA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BA is 63.6. 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 26.3% in 2021 through October 29th and beat the market again by 2.3 percentage points. Unfortunately BA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BA were disappointed as the stock returned -13.6% since the end of June (through 10/29) 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.