Hedge Funds Are Still Selling Off Aerojet Rocketdyne Holdings, Inc. (AJRD)

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD).

Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD) was in 14 hedge funds’ portfolios at the end of September. AJRD has experienced a decrease in hedge fund sentiment of late. There were 16 hedge funds in our database with AJRD positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Amerisafe, Inc. (NASDAQ:AMSF), American Equity Investment Life Holding (NYSE:AEL), and Alliance Resource Partners, L.P. (NASDAQ:ARLP) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Sergey Kohl / Shutterstock.com

How are hedge funds trading Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD)?

At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a 13% drop from the second quarter of 2016, and the fourth-consecutive quarter that hedge fund ownership of the stock has fallen. The graph below displays the number of hedge funds with bullish position in AJRD over the last 5 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Mario Gabelli’s GAMCO Investors has the number one position in Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD), worth close to $83.5 million. The second largest stake is held by Steel Partners, led by Warren Lichtenstein, holding a $73.5 million position; the fund has 22.6% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain Michael Blitzer’s Kingstown Capital Management, Jim Simons’ Renaissance Technologies, and Chuck Royce’s Royce & Associates. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Since Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedge funds that elected to cut their entire stakes by the end of the third quarter. Interestingly, Jacob Gottlieb’s Visium Asset Management got rid of the largest investment of all the hedgies tracked by Insider Monkey, worth about $6.9 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also sold off its stock, about $2.1 million worth.

Let’s check out 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 Amerisafe, Inc. (NASDAQ:AMSF), American Equity Investment Life Holding (NYSE:AEL), Alliance Resource Partners, L.P. (NASDAQ:ARLP), and AlarmCom Hldg Inc (NASDAQ:ALRM). All of these stocks’ market caps match AJRD’s market cap.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $272 million in AJRD’s case. American Equity Investment Life Holding (NYSE:AEL) is the most popular stock in this table. On the other hand Alliance Resource Partners, L.P. (NASDAQ:ARLP) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and have a lot more money invested in it, it may be a good idea to analyze it in detail and potentially include it in your portfolio. However, the still-falling hedge fund ownership is cause for concern.

Disclosure: None