Air Lease Corp (AL): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do?

Is Air Lease Corp (NYSE:AL) a healthy stock for your portfolio? The smart money is in a pessimistic mood. The number of bullish hedge fund bets were cut by 5 recently.

According to most traders, hedge funds are viewed as unimportant, outdated investment tools of years past. While there are more than 8000 funds trading today, we at Insider Monkey hone in on the moguls of this group, close to 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total capital, and by monitoring their top picks, we have formulated a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as integral, optimistic insider trading sentiment is another way to break down the marketplace. There are lots of stimuli for an executive to downsize shares of his or her company, but only one, very simple reason why they would buy. Many academic studies have demonstrated the valuable potential of this method if shareholders know where to look (learn more here).

With all of this in mind, it’s important to take a glance at the key action surrounding Air Lease Corp (NYSE:AL).

What does the smart money think about Air Lease Corp (NYSE:AL)?

In preparation for this quarter, a total of 12 of the hedge funds we track held long positions in this stock, a change of -29% from the first quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably.

According to our comprehensive database, Osterweis Capital Management, managed by John Osterweis, holds the largest position in Air Lease Corp (NYSE:AL). Osterweis Capital Management has a $95.2 million position in the stock, comprising 3.6% of its 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $59.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Jim Simons’s Renaissance Technologies and Christopher C. Grisanti’s Grisanti Brown & Partners.

Due to the fact that Air Lease Corp (NYSE:AL) has witnessed bearish sentiment from the smart money, it’s easy to see that there was a specific group of money managers that decided to sell off their entire stakes heading into Q2. Intriguingly, Wilbur Ross’s Invesco Private Capital (WL Ross) cut the biggest investment of the 450+ funds we track, comprising about $91.4 million in stock., and Murray Stahl of Horizon Asset Management was right behind this move, as the fund dropped about $19 million worth. These transactions are important to note, as total hedge fund interest dropped by 5 funds heading into Q2.

What have insiders been doing with Air Lease Corp (NYSE:AL)?

Bullish insider trading is best served when the company we’re looking at has experienced transactions within the past 180 days. Over the latest 180-day time period, Air Lease Corp (NYSE:AL) has seen 1 unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Air Lease Corp (NYSE:AL). These stocks are GATX Corporation (NYSE:GMT), AMERCO (NASDAQ:UHAL), Ryder System, Inc. (NYSE:R), , and Avis Budget Group Inc. (NASDAQ:CAR). This group of stocks are in the rental & leasing services industry and their market caps are similar to AL’s market cap.

With the returns demonstrated by Insider Monkey’s studies, retail investors must always pay attention to hedge fund and insider trading sentiment, and Air Lease Corp (NYSE:AL) is an important part of this process.

Click here to learn why you should track hedge funds