Should I Buy Atlas Air Worldwide Holdings, Inc. (AAWW)?

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW).

Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) shareholders have witnessed an increase in support from the world’s most elite money managers of late. Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) was in 27 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. There were 26 hedge funds in our database with AAWW holdings at the end of June. Our calculations also showed that AAWW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s take a look at the fresh hedge fund action encompassing Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW).

Do Hedge Funds Think AAWW Is A Good Stock To Buy Now?

At third quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from one quarter earlier. By comparison, 27 hedge funds held shares or bullish call options in AAWW a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Among these funds, Greenlight Capital held the most valuable stake in Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW), which was worth $123.7 million at the end of the third quarter. On the second spot was Hill City Capital which amassed $117.2 million worth of shares. Fisher Asset Management, Royce & Associates, and Brightline Capital 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 Hill City Capital allocated the biggest weight to Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW), around 29.72% of its 13F portfolio. Brightline Capital is also relatively very bullish on the stock, setting aside 11.68 percent of its 13F equity portfolio to AAWW.

Now, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most valuable position in Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW). Balyasny Asset Management had $11.1 million invested in the company at the end of the quarter. George McCabe’s Portolan Capital Management also initiated a $4.3 million position during the quarter. The other funds with brand new AAWW positions are Alexander Mitchell’s Scopus Asset Management, Ira Unschuld’s Brant Point Investment Management, and D. E. Shaw’s D E Shaw.

Let’s now take a look at 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 Inter Parfums, Inc. (NASDAQ:IPAR), Kadant Inc. (NYSE:KAI), Hub Group Inc (NASDAQ:HUBG), Owens & Minor, Inc. (NYSE:OMI), Federal Signal Corporation (NYSE:FSS), Mueller Industries, Inc. (NYSE:MLI), and Minerals Technologies Inc (NYSE:MTX). This group of stocks’ market values match AAWW’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.7 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $392 million in AAWW’s case. Hub Group Inc (NASDAQ:HUBG) is the most popular stock in this table. On the other hand Federal Signal Corporation (NYSE:FSS) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) is more popular among hedge funds. Our overall hedge fund sentiment score for AAWW is 79.1. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately AAWW wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AAWW were disappointed as the stock returned 6.1% since the end of the third quarter (through 12/9) 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.

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