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Hedge Funds Souring On Astronics Corporation (ATRO)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Astronics Corporation (NASDAQ:ATRO) based on that data.

Astronics Corporation (NASDAQ:ATRO) has experienced a decrease in support from the world’s most elite money managers lately. Our calculations also showed that ATRO 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).

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

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ric Dillon Diamond Hill Capital

Ric Dillon of Diamond Hill Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. 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 glance at the latest hedge fund action encompassing Astronics Corporation (NASDAQ:ATRO).

What does smart money think about Astronics Corporation (NASDAQ:ATRO)?

At Q1’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in ATRO a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Among these funds, International Value Advisers held the most valuable stake in Astronics Corporation (NASDAQ:ATRO), which was worth $34.7 million at the end of the third quarter. On the second spot was Paradice Investment Management which amassed $12 million worth of shares. Royce & Associates, Bares Capital Management, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position International Value Advisers allocated the biggest weight to Astronics Corporation (NASDAQ:ATRO), around 2.19% of its 13F portfolio. Paradice Investment Management is also relatively very bullish on the stock, dishing out 1.33 percent of its 13F equity portfolio to ATRO.

Judging by the fact that Astronics Corporation (NASDAQ:ATRO) has experienced declining sentiment from hedge fund managers, it’s safe to say that there is a sect of money managers who were dropping their positions entirely by the end of the first quarter. Intriguingly, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors said goodbye to the largest position of all the hedgies watched by Insider Monkey, valued at about $1.5 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund dumped about $1.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Astronics Corporation (NASDAQ:ATRO) but similarly valued. These stocks are Peabody Energy Corporation (NYSE:BTU), Cambridge Bancorp (NASDAQ:CATC), Summit Financial Group, Inc. (NASDAQ:SMMF), and Lannett Company, Inc. (NYSE:LCI). This group of stocks’ market values resemble ATRO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BTU 25 129012 -4
CATC 9 15932 2
SMMF 2 6045 -1
LCI 8 31303 -3
Average 11 45573 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $64 million in ATRO’s case. Peabody Energy Corporation (NYSE:BTU) is the most popular stock in this table. On the other hand Summit Financial Group, Inc. (NASDAQ:SMMF) is the least popular one with only 2 bullish hedge fund positions. Astronics Corporation (NASDAQ:ATRO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately ATRO wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ATRO were disappointed as the stock returned 9.8% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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