Hedge Funds Never Been Less Bullish On Rayonier Advanced Materials Inc (RYAM)

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Rayonier Advanced Materials Inc (NYSE:RYAM) based on that data.

Is Rayonier Advanced Materials Inc (NYSE:RYAM) a buy, sell, or hold? Investors who are in the know are becoming less hopeful. The number of long hedge fund positions decreased by 4 lately. Our calculations also showed that RYAM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). RYAM was in 8 hedge funds’ portfolios at the end of March. There were 12 hedge funds in our database with RYAM positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

At the moment there are plenty of tools shareholders use to evaluate their stock investments. A duo of the most underrated tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can outperform the S&P 500 by a significant margin (see the details here).

Jonathan Barrett Luminus Management

Jonathan Barrett of Luminus Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the fresh hedge fund action encompassing Rayonier Advanced Materials Inc (NYSE:RYAM).

What does smart money think about Rayonier Advanced Materials Inc (NYSE:RYAM)?

At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in RYAM over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Rayonier Advanced Materials Inc (NYSE:RYAM) was held by Renaissance Technologies, which reported holding $5.2 million worth of stock at the end of September. It was followed by Luminus Management with a $1.1 million position. Other investors bullish on the company included Two Sigma Advisors, Horizon Asset Management, and Royce & Associates. In terms of the portfolio weights assigned to each position Luminus Management allocated the biggest weight to Rayonier Advanced Materials Inc (NYSE:RYAM), around 0.11% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to RYAM.

Seeing as Rayonier Advanced Materials Inc (NYSE:RYAM) has faced a decline in interest from hedge fund managers, logic holds that there were a few funds that decided to sell off their full holdings heading into Q4. Intriguingly, Phill Gross and Robert Atchinson’s Adage Capital Management cut the largest investment of all the hedgies tracked by Insider Monkey, worth an estimated $6.9 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also sold off its stock, about $0.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 4 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Rayonier Advanced Materials Inc (NYSE:RYAM) but similarly valued. We will take a look at PRGX Global Inc (NASDAQ:PRGX), Celcuity Inc. (NASDAQ:CELC), Akerna Corp. (NASDAQ:KERN), and Ampio Pharmaceuticals, Inc. (NYSE:AMPE). This group of stocks’ market valuations match RYAM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PRGX 8 21483 2
CELC 2 492 0
KERN 2 108 -1
AMPE 1 79 -2
Average 3.25 5541 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.25 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $7 million in RYAM’s case. PRGX Global Inc (NASDAQ:PRGX) is the most popular stock in this table. On the other hand Ampio Pharmaceuticals, Inc. (NYSE:AMPE) is the least popular one with only 1 bullish hedge fund positions. Rayonier Advanced Materials Inc (NYSE:RYAM) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but still beat the market by 14.8 percentage points. Hedge funds were also right about betting on RYAM as the stock returned 132.1% in Q2 (through June 17th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.