Aircastle Limited (NYSE:AYR) was in 14 hedge funds’ portfolio at the end of December. AYR investors should pay attention to a decrease in hedge fund sentiment of late. There were 17 hedge funds in our database with AYR holdings at the end of the previous quarter.
According to most traders, hedge funds are viewed as slow, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation today, we at Insider Monkey choose to focus on the elite of this club, close to 450 funds. Most estimates calculate that this group controls most of the hedge fund industry’s total capital, and by watching their best stock picks, we have discovered a number of investment strategies that have historically outperformed the broader indices. 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 beaten the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Equally as important, positive insider trading activity is another way to parse down the stock market universe. Just as you’d expect, there are a number of stimuli for an insider to get rid of shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this strategy if investors know where to look (learn more here).
Consequently, we’re going to take a peek at the key action encompassing Aircastle Limited (NYSE:AYR).
What have hedge funds been doing with Aircastle Limited (NYSE:AYR)?
At the end of the fourth quarter, a total of 14 of the hedge funds we track were long in this stock, a change of -18% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings considerably.
When looking at the hedgies we track, Dreman Value Management, managed by David Dreman, holds the most valuable position in Aircastle Limited (NYSE:AYR). Dreman Value Management has a $28 million position in the stock, comprising 0.8% of its 13F portfolio. Coming in second is Edward Goodnow of Goodnow Investment Group, with a $23 million position; the fund has 5.3% of its 13F portfolio invested in the stock. Other peers with similar optimism include Debra Fine’s Fine Capital Partners, Bill Miller’s Legg Mason Capital Management and Ken Griffin’s Citadel Investment Group.
Since Aircastle Limited (NYSE:AYR) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there exists a select few hedge funds that decided to sell off their positions entirely at the end of the year. Interestingly, Cliff Asness’s AQR Capital Management dumped the largest investment of the 450+ funds we watch, comprising an estimated $18 million in stock., and Brian Taylor of Pine River Capital Management was right behind this move, as the fund said goodbye to about $8 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 3 funds at the end of the year.
What do corporate executives and insiders think about Aircastle Limited (NYSE:AYR)?
Bullish insider trading is most useful when the company in question has seen transactions within the past 180 days. Over the latest half-year time frame, Aircastle Limited (NYSE:AYR) has experienced 1 unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Aircastle Limited (NYSE:AYR). These stocks are Fly Leasing Ltd(ADR) (NYSE:FLY), seacube container leasing ltd (NYSE:BOX), TAL International Group, Inc. (NYSE:TAL), CAI International Inc (NYSE:CAP), and McGrath RentCorp (NASDAQ:MGRC). This group of stocks are the members of the rental & leasing services industry and their market caps are closest to AYR’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Fly Leasing Ltd(ADR) (NYSE:FLY)||6||0||0|
|seacube container leasing ltd (NYSE:BOX)||6||0||0|
|TAL International Group, Inc. (NYSE:TAL)||4||1||6|
|CAI International Inc (NYSE:CAP)||7||0||2|
|McGrath RentCorp (NASDAQ:MGRC)||5||0||11|
With the returns exhibited by our time-tested strategies, everyday investors should always keep an eye on hedge fund and insider trading activity, and Aircastle Limited (NYSE:AYR) is an important part of this process.
Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.