Is Atlas Air Worldwide Holdings, Inc. (AAWW) Going To Burn These Hedge Funds ?

Is Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) a bargain? Hedge funds are taking a bearish view. The number of bullish hedge fund bets dropped by 3 recently. Our calculations also showed that AAWW isn’t among the 30 most popular stocks among hedge funds (see the video below). AAWW was in 16 hedge funds’ portfolios at the end of the second quarter of 2019. There were 19 hedge funds in our database with AAWW holdings at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.


Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to view the new hedge fund action encompassing Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW).

What have hedge funds been doing with Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW)?

Heading into the third quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AAWW over the last 16 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

Matthew Hulsizer PEAK6 Capital

The largest stake in Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) was held by Fisher Asset Management, which reported holding $23.1 million worth of stock at the end of March. It was followed by Royce & Associates with a $11.5 million position. Other investors bullish on the company included SCW Capital Management, Lonestar Capital Management, and Millennium Management.

Since Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of money managers who sold off their entire stakes by the end of the second quarter. It’s worth mentioning that Israel Englander’s Millennium Management said goodbye to the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $16.5 million in stock, and Michael Hintze’s CQS Cayman LP was right behind this move, as the fund said goodbye to about $10.7 million worth. These transactions are important to note, as total hedge fund interest fell by 3 funds by the end of the second quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) but similarly valued. These stocks are Golub Capital BDC Inc (NASDAQ:GBDC), BrightSphere Investment Group Inc. (NYSE:BSIG), Tennant Company (NYSE:TNC), and The St. Joe Company (NYSE:JOE). This group of stocks’ market valuations match AAWW’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GBDC 8 38976 0
BSIG 19 325677 -2
TNC 6 64973 -9
JOE 12 506445 -1
Average 11.25 234018 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $234 million. That figure was $72 million in AAWW’s case. BrightSphere Investment Group Inc. (NYSE:BSIG) is the most popular stock in this table. On the other hand Tennant Company (NYSE:TNC) is the least popular one with only 6 bullish hedge fund positions. Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately AAWW wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AAWW were disappointed as the stock returned -43.5% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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