Were Hedge Funds Right About United Airlines (UAL)?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards United Airlines Holdings Inc (NASDAQ:UAL).

Is United Airlines Holdings Inc (NASDAQ:UAL) worth your attention right now? Investors who are in the know were becoming more confident. The number of long hedge fund positions rose by 12 in recent months. United Airlines Holdings Inc (NASDAQ:UAL) was in 52 hedge funds’ portfolios at the end of December. The all time high for this statistic is 73. Our calculations also showed that UAL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are plenty of gauges stock traders have at their disposal to grade stocks. A pair of the most under-the-radar gauges are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace their index-focused peers by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Brad Gerstner of Altimeter Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. Keeping this in mind we’re going to check out the recent hedge fund action encompassing United Airlines Holdings Inc (NASDAQ:UAL).

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

At Q4’s end, a total of 52 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from the previous quarter. By comparison, 62 hedge funds held shares or bullish call options in UAL 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.

More specifically, PAR Capital Management was the largest shareholder of United Airlines Holdings Inc (NASDAQ:UAL), with a stake worth $305.1 million reported as of the end of December. Trailing PAR Capital Management was Altimeter Capital Management, which amassed a stake valued at $207.7 million. Two Sigma Advisors, Millennium Management, and Aristeia 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 PAR Capital Management allocated the biggest weight to United Airlines Holdings Inc (NASDAQ:UAL), around 8.9% of its 13F portfolio. Sonic Capital is also relatively very bullish on the stock, setting aside 4.01 percent of its 13F equity portfolio to UAL.

As one would reasonably expect, specific money managers have been driving this bullishness. Jericho Capital Asset Management, managed by Josh Resnick, initiated the most outsized position in United Airlines Holdings Inc (NASDAQ:UAL). Jericho Capital Asset Management had $48.4 million invested in the company at the end of the quarter. Renaissance Technologies also made a $31.5 million investment in the stock during the quarter. The following funds were also among the new UAL investors: Robert Bishop’s Impala Asset Management, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Michael Gelband’s ExodusPoint Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as United Airlines Holdings Inc (NASDAQ:UAL) but similarly valued. We will take a look at Franklin Resources, Inc. (NYSE:BEN), FactSet Research Systems Inc. (NYSE:FDS), China Southern Airlines Co Ltd (NYSE:ZNH), Molina Healthcare, Inc. (NYSE:MOH), Evergy, Inc. (NYSE:EVRG), Nuance Communications Inc. (NASDAQ:NUAN), and Enel Americas S.A. (NYSE:ENIA). This group of stocks’ market valuations resemble UAL’s market valuation.

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As you can see these stocks had an average of 27.9 hedge funds with bullish positions and the average amount invested in these stocks was $1164 million. That figure was $1096 million in UAL’s case. Nuance Communications Inc. (NASDAQ:NUAN) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (NYSE:ZNH) is the least popular one with only 3 bullish hedge fund positions. United Airlines Holdings Inc (NASDAQ:UAL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UAL is 74.4. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on UAL as the stock returned 25.8% since the end of Q4 (through 4/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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