Hedge Funds Are Selling US Airways Group, Inc. (LCC)
The US Airways Group, Inc. (NYSE:LCC) merger seemed like a done deal. Now, it's 50/50, according to many analysts. The U.S. government might still lose its suit, but it's clear that hedge funds don't like the suddenly riskier merger arb situation.
If you were to ask many market players, hedge funds are perceived as overrated, old investment tools of a period lost to current times. Although there are more than 8,000 hedge funds trading in present day, this site aim at the moguls of this club, about 525 funds. Analysts calculate that this group has its hands on the majority of all hedge funds' total assets, and by paying attention to their highest quality picks, we've deciphered a number of investment strategies that have historically outstripped the S&P 500. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Equally as useful, positive insider trading sentiment is a second way to look at the marketplace. As the old adage goes: there are plenty of motivations for a bullish insider to sell shares of his or her company, but just one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this tactic if you understand what to do (learn more here).
What's more, we're going to discuss the newest info surrounding US Airways Group, Inc. (NYSE:LCC).
What does the smart money think about US Airways Group, Inc. (NYSE:LCC)?
At Q2's end, a total of 42 of the hedge funds we track were bullish in this stock, a change of -11% from one quarter earlier. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings significantly.
Out of the hedge funds we follow, Michael Platt and William Reeves's BlueCrest Capital Mgmt. had the largest call position in US Airways Group, Inc. (NYSE:LCC), worth close to $414.6 million, accounting for 21.5% of its total 13F portfolio. Sitting at the No. 2 spot is David Tepper of Appaloosa Management LP, with a $153.4 million position; 2.2% of its 13F portfolio is allocated to the stock. Remaining hedgies with similar optimism include Randall Smith's Alden Global Capital, Matthew Halbower's Pentwater Capital Management and Anthony Bozza's Lakewood Capital Management.
Since US Airways Group, Inc. (NYSE:LCC) has experienced dropping sentiment from the smart money's best and brightest, it's easy to see that there were a few fund managers who were dropping their entire stakes in Q1. Interestingly, George Soros's Soros Fund Management sold off the biggest stake of the "upper crust" of funds we watch, valued at close to $133.1 million in call options.. Michael A. Price and Amos Meron's fund, Empyrean Capital Partners, also cut its call options., about $25.5 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 5 funds in Q1.
What have insiders been doing with US Airways Group, Inc. (NYSE:LCC)?
Insider buying made by high-level executives is most useful when the company in question has seen transactions within the past half-year. Over the last six-month time frame, US Airways Group, Inc. (NYSE:LCC) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).
We'll go over the relationship between both of these indicators in other stocks similar to US Airways Group, Inc. (NYSE:LCC). These stocks are Delta Air Lines, Inc. (NYSE:DAL), United Continental Holdings Inc (NYSE:UAL), China Southern Airlines Co Ltd (ADR) (NYSE:ZNH), China Eastern Airlines Corp. Ltd. (ADR) (NYSE:CEA), and Spirit Airlines Incorporated (NASDAQ:SAVE). All of these stocks are in the major airlines industry and their market caps resemble LCC's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Delta Air Lines, Inc. (NYSE:DAL)
United Continental Holdings Inc (NYSE:UAL)
China Southern Airlines Co Ltd (ADR) (NYSE:ZNH)
China Eastern Airlines Corp. Ltd. (ADR) (NYSE:CEA)
Spirit Airlines Incorporated (NASDAQ:SAVE)
Using the results shown by our analyses, average investors must always keep one eye on hedge fund and insider trading sentiment, and US Airways Group, Inc. (NYSE:LCC) shareholders fit into this picture quite nicely.