Do Hedge Funds Love The Boeing Company (BA)?

·5 min read

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards The Boeing Company (NYSE:BA).

Is The Boeing Company (NYSE:BA) a buy here? Prominent investors were getting less bullish. The number of bullish hedge fund bets shrunk by 9 recently. The Boeing Company (NYSE:BA) was in 50 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).

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 let's take a look at the recent hedge fund action regarding The Boeing Company (NYSE:BA).


Israel Englander of Millennium Management

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

At Q3's end, a total of 50 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards BA over the last 25 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

According to Insider Monkey's hedge fund database, Ken Griffin's Citadel Investment Group has the largest call position in The Boeing Company (NYSE:BA), worth close to $1.9354 billion, corresponding to 0.4% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, which holds a $329.6 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining peers with similar optimism consist of D. E. Shaw's D E Shaw, Israel Englander's Millennium Management and Phill Gross and Robert Atchinson's Adage Capital Management. 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, dishing out 5 percent of its 13F equity portfolio to BA.

Judging by the fact that The Boeing Company (NYSE:BA) has faced falling interest from the smart money, logic holds that there is a sect of fund managers that slashed their positions entirely in the third quarter. Intriguingly, Hari Hariharan's NWI Management dropped the largest stake of the "upper crust" of funds watched by Insider Monkey, comprising about $59.9 million in stock. Bill Miller's fund, Miller Value Partners, also sold off its stock, about $48.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 9 funds in the third quarter.

Let's now review hedge fund activity in other stocks similar to The Boeing Company (NYSE:BA). We will take a look at 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). All of these stocks' market caps are similar to BA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UNP,63,4886422,-6 BLK,44,1085328,-3 GS,74,5451988,13 TTE,16,1398818,1 AMD,65,5254017,2 IBM,41,1405372,0 NOW,87,7527653,-4 Average,55.7,3858514,0.4 [/table]

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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 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 -10% since the end of September (through 11/30) 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.

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