Gencorp Inc (GY): Are Hedge Funds Right About This Stock?

Is Gencorp Inc (NYSE:GY) a buy, sell, or hold? Hedge funds are getting more optimistic. The number of bullish hedge fund positions advanced by 1 lately.

In the financial world, there are dozens of metrics investors can use to monitor publicly traded companies. Two of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite money managers can outperform the broader indices by a healthy amount (see just how much).

Just as beneficial, positive insider trading sentiment is a second way to parse down the marketplace. As the old adage goes: there are lots of incentives for a corporate insider to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this tactic if you know where to look (learn more here).

Keeping this in mind, let’s take a look at the key action regarding Gencorp Inc (NYSE:GY).

What does the smart money think about Gencorp Inc (NYSE:GY)?

At the end of the first quarter, a total of 24 of the hedge funds we track held long positions in this stock, a change of 4% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially.

When looking at the hedgies we track, Richard McGuire’s Marcato Capital Management had the biggest position in Gencorp Inc (NYSE:GY), worth close to $76.7 million, comprising 10.6% of its total 13F portfolio. Coming in second is GAMCO Investors, managed by Mario Gabelli, which held a $70.6 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Warren Lichtenstein’s Steel Partners, Michael Blitzer’s Kingstown Capital Management and Manish Chopra’s Tiger Veda.

As aggregate interest increased, key money managers have been driving this bullishness. Tiger Veda, managed by Manish Chopra, initiated the biggest position in Gencorp Inc (NYSE:GY). Tiger Veda had 21.8 million invested in the company at the end of the quarter. Bart Baum’s Ionic Capital Management also initiated a $4.5 million position during the quarter. The following funds were also among the new GY investors: Brian Jackelow’s SAB Capital Management, Curtis Schenker and Craig Effron’s Scoggin, and Thomas A. Giovine’s Giovine Capital.

What do corporate executives and insiders think about Gencorp Inc (NYSE:GY)?

Bullish insider trading is best served when the primary stock in question has experienced transactions within the past half-year. Over the latest six-month time period, Gencorp Inc (NYSE:GY) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Gencorp Inc (NYSE:GY). These stocks are Raytheon Company (NYSE:RTN), Northrop Grumman Corporation (NYSE:NOC), Textron Inc. (NYSE:TXT), , and AerCap Holdings N.V. (NYSE:AER). All of these stocks are in the aerospace/defense – major diversified industry and their market caps are similar to GY’s market cap.