After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Aerojet Rocketdyne Holdings Inc (NYSE:AJRD).
Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) has experienced a decrease in enthusiasm from smart money recently. Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) was in 30 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 36. Our calculations also showed that AJRD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Sander Gerber of Hudson Bay Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to check out the new hedge fund action regarding Aerojet Rocketdyne Holdings Inc (NYSE:AJRD).
Do Hedge Funds Think AJRD Is A Good Stock To Buy Now?
At first quarter’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in AJRD a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
More specifically, Steel Partners was the largest shareholder of Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), with a stake worth $185.5 million reported as of the end of March. Trailing Steel Partners was Magnetar Capital, which amassed a stake valued at $143.2 million. GAMCO Investors, Alpine Associates, and Two Sigma Advisors 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 Steel Partners allocated the biggest weight to Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), around 66.25% of its 13F portfolio. Havens Advisors is also relatively very bullish on the stock, setting aside 4.77 percent of its 13F equity portfolio to AJRD.
Because Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedgies that slashed their full holdings last quarter. Interestingly, Ken Griffin’s Citadel Investment Group dumped the largest position of all the hedgies tracked by Insider Monkey, valued at an estimated $265.6 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was right behind this move, as the fund said goodbye to about $25.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 6 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) but similarly valued. We will take a look at GoHealth, Inc. (NASDAQ:GOCO), Kinsale Capital Group, Inc. (NASDAQ:KNSL), Olo Inc. (NYSE:OLO), Safehold Inc. (NYSE:SAFE), Physicians Realty Trust (NYSE:DOC), Companhia Energetica Minas Gerais (NYSE:CIG), and Commercial Metals Company (NYSE:CMC). This group of stocks’ market valuations are closest to AJRD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GOCO | 17 | 549530 | -1 |
| KNSL | 17 | 49810 | 0 |
| OLO | 21 | 85960 | 21 |
| SAFE | 8 | 7714 | -1 |
| DOC | 19 | 119409 | 4 |
| CIG | 13 | 65122 | 1 |
| CMC | 20 | 134704 | -3 |
| Average | 16.4 | 144607 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.4 hedge funds with bullish positions and the average amount invested in these stocks was $145 million. That figure was $786 million in AJRD’s case. Olo Inc. (NYSE:OLO) is the most popular stock in this table. On the other hand Safehold Inc. (NYSE:SAFE) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) is more popular among hedge funds. Our overall hedge fund sentiment score for AJRD is 74. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Unfortunately AJRD wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AJRD were disappointed as the stock returned 2.9% since the end of the first quarter (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Aerojet Rocketdyne Holdings Inc. (NYSE:AJRD)
Follow Aerojet Rocketdyne Holdings Inc. (NYSE:AJRD)
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Disclosure: None. This article was originally published at Insider Monkey.
