United Continental Holdings Inc (UAL): Hedge Funds Are Bearish and Insiders Are Undecided, What Should You Do?

Do you own United Continental Holdings Inc (NYSE:UAL)? Then this data's for you.

If you were to ask many traders, hedge funds are seen as bloated, old financial vehicles of a forgotten age. Although there are more than 8,000 hedge funds trading currently, this site focuses on the moguls of this group, around 525 funds. It is assumed that this group controls the lion's share of all hedge funds' total capital, and by watching their highest quality investments, we've figured out a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outstripped 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 outclassed the S&P 500 index by 33 percentage points in 11 months (find the details here).

Equally as key, optimistic insider trading sentiment is a second way to look at the stock market universe. There are a number of motivations for a bullish insider to sell shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the useful potential of this strategy if shareholders understand where to look (learn more here).

What's more, let's discuss the newest info about United Continental Holdings Inc (NYSE:UAL).



How have hedgies been trading United Continental Holdings Inc (NYSE:UAL)?


At the end of the second quarter, a total of 42 of the hedge funds we track were bullish in this stock, a change of -9% from one quarter earlier. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes significantly.

United Continental Holdings Inc (NYSE:UAL)According to our 13F database, Thomas E. Claugus's GMT Capital had the largest position in United Continental Holdings Inc (NYSE:UAL), worth close to $323.6 million, comprising 7.4% of its total 13F portfolio. The second largest stake is held by Appaloosa Management LP, managed by David Tepper, which held a $241.9 million position; the fund has 3.5% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Crispin Odey's Odey Asset Management Group, George Soros's Soros Fund Management and Bill Miller's Legg Mason Capital Management.


Judging by the fact that United Continental Holdings Inc (NYSE:UAL) has experienced a fall in interest from upper-tier hedge fund managers, it's safe to say that there lies a certain "tier" of hedgies who sold off their full holdings heading into Q2. Interestingly, David Costen Haley's HBK Investments said goodbye to the largest investment of all the hedgies we key on, totaling close to $149 million in stock, and Randall Smith of Alden Global Capital was right behind this move, as the fund said goodbye to about $57.7 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 4 funds heading into Q2.


Insider trading activity in United Continental Holdings Inc (NYSE:UAL)


Bullish insider trading is most useful when the company in focus has experienced transactions within the past half-year. Over the latest half-year time period, United Continental Holdings Inc (NYSE:UAL) has experienced zero unique insiders buying, and 5 insider sales (see the details of insider trades here).

We'll check out the relationship between both of these indicators in other stocks similar to United Continental Holdings Inc (NYSE:UAL). These stocks are Spirit Airlines Incorporated (NASDAQ:SAVE), US Airways Group, Inc. (NYSE:LCC), China Eastern Airlines Corp. Ltd. (ADR) (NYSE:CEA), China Southern Airlines Co Ltd (ADR) (NYSE:ZNH), and Delta Air Lines, Inc. (NYSE:DAL). This group of stocks belong to the major airlines industry and their market caps are similar to UAL's market cap.

Company Name
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling

Spirit Airlines Incorporated (NASDAQ:SAVE)
20
0
7

US Airways Group, Inc. (NYSE:LCC)
42
0
6

China Eastern Airlines Corp. Ltd. (ADR) (NYSE:CEA)
1
0
0

China Southern Airlines Co Ltd (ADR) (NYSE:ZNH)
1
0
0

Delta Air Lines, Inc. (NYSE:DAL)
65
2
4

Using the returns demonstrated by our strategies, average investors should always track hedge fund and insider trading sentiment, and United Continental Holdings Inc (NYSE:UAL) shareholders fit into this picture quite nicely.

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