Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about The Boeing Company (NYSE:BA) in this article.
Is BA a good stock to buy now? Hedge funds were becoming more confident. The number of long hedge fund positions inched up by 4 in recent months. The Boeing Company (NYSE:BA) was in 43 hedge funds' portfolios at the end of September. The all time high for this statistic is 83. Our calculations also showed that BA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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. 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 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. 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
David Siegel of Two Sigma Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we're going to take a look at the recent hedge fund action encompassing The Boeing Company (NYSE:BA).
Do Hedge Funds Think BA Is A Good Stock To Buy Now?
At Q3's end, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. On the other hand, there were a total of 83 hedge funds with a bullish position in BA a year ago. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Is BA A Good Stock To Buy?
More specifically, Citadel Investment Group was the largest shareholder of The Boeing Company (NYSE:BA), with a stake worth $948.7 million reported as of the end of September. Trailing Citadel Investment Group was D E Shaw, which amassed a stake valued at $493 million. Arrowstreet Capital, Two Sigma Advisors, and Citadel Investment Group 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 Heard Capital allocated the biggest weight to The Boeing Company (NYSE:BA), around 4.92% of its 13F portfolio. NWI Management is also relatively very bullish on the stock, dishing out 3.59 percent of its 13F equity portfolio to BA.
Now, key hedge funds were leading the bulls' herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the largest position in The Boeing Company (NYSE:BA). Arrowstreet Capital had $432.6 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also made a $201 million investment in the stock during the quarter. The other funds with brand new BA positions are Benjamin A. Smith's Laurion Capital Management, Peter S. Stamos's Stamos Capital, and Jaime Sterne's Skye Global Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as The Boeing Company (NYSE:BA) but similarly valued. We will take a look at ServiceNow Inc (NYSE:NOW), 3M Company (NYSE:MMM), HDFC Bank Limited (NYSE:HDB), Fidelity National Information Services Inc. (NYSE:FIS), TOTAL S.A. (NYSE:TOT), Citigroup Inc. (NYSE:C), and Pinduoduo Inc. (NASDAQ:PDD). This group of stocks' market valuations resemble BA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NOW,82,5945474,-4 MMM,56,1347738,14 HDB,34,1121313,-8 FIS,88,7940617,-23 TOT,18,639601,-1 C,91,5545152,-5 PDD,34,4331330,4 Average,57.6,3838746,-3.3 [/table]
As you can see these stocks had an average of 57.6 hedge funds with bullish positions and the average amount invested in these stocks was $3839 million. That figure was $1703 million in BA's case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand TOTAL S.A. (NYSE:TOT) is the least popular one with only 18 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 41.7. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on BA as the stock returned 43.2% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
