Rayonier Advanced Materials Inc (RYAM): Are Hedge Funds Right About This Stock?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Rayonier Advanced Materials Inc (NYSE:RYAM).

Is Rayonier Advanced Materials Inc (NYSE:RYAM) the right pick for your portfolio? Investors who are in the know are taking an optimistic view. The number of bullish hedge fund bets inched up by 4 in recent months. RYAM was in 24 hedge funds’ portfolios at the end of the third quarter of 2016. There were 20 hedge funds in our database with RYAM holdings at the end of the previous quarter. At the end of this article we will also compare RYAM to other stocks including Virtus Investment Partners Inc (NASDAQ:VRTS), CTS Corporation (NYSE:CTS), and ePlus Inc. (NASDAQ:PLUS) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What have hedge funds been doing with Rayonier Advanced Materials Inc (NYSE:RYAM)?

Heading into the fourth quarter of 2016, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 20% increase from the previous quarter. Hedge fund ownership has now risen in two straight quarters to reach a yearly high. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Jim Simons’ Renaissance Technologies has the number one position in Rayonier Advanced Materials Inc (NYSE:RYAM), worth close to $40.5 million. The second most bullish fund manager is AQR Capital Management, led by Cliff Asness, holding a $15.8 million position. Other members of the smart money that are bullish contain Michael Platt and William Reeves’ BlueCrest Capital Mgmt., Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co.

As aggregate interest increased, key hedge funds have been driving this bullishness. BlueCrest Capital Mgmt. initiated the most outsized position in Rayonier Advanced Materials Inc (NYSE:RYAM). BlueCrest Capital Mgmt. had $8.6 million invested in the company at the end of the quarter. Angelo Gordon & Co also initiated a $7.3 million position during the quarter. The following funds were also among the new RYAM investors: Andy Redleaf’s Whitebox Advisors, Bart Baum’s Ionic Capital Management, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Rayonier Advanced Materials Inc (NYSE:RYAM) but similarly valued. These stocks are Virtus Investment Partners Inc (NASDAQ:VRTS), CTS Corporation (NYSE:CTS), ePlus Inc. (NASDAQ:PLUS), and Fiesta Restaurant Group Inc (NASDAQ:FRGI). This group of stocks’ market valuations are similar to RYAM’s market valuation.

As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $107 million in RYAM’s case. Fiesta Restaurant Group Inc (NASDAQ:FRGI) is the most popular stock in this table. On the other hand CTS Corporation (NYSE:CTS) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Rayonier Advanced Materials Inc (NYSE:RYAM) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and growing fonder still, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None