Is Aircastle Limited (AYR) A Good Stock To Buy?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Aircastle Limited (NYSE:AYR).

Aircastle Limited (NYSE:AYR) has experienced a decrease in support from the world’s most successful money managers lately. There were 14 hedge funds in our database with AYR holdings 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 FCB Financial Holdings Inc (NYSE:FCB), American Equity Investment Life Holding (NYSE:AEL), and Envestnet Inc (NYSE:ENV) 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.

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With all of this in mind, we’re going to take a look at the key action regarding Aircastle Limited (NYSE:AYR).

What have hedge funds been doing with Aircastle Limited (NYSE:AYR)?

Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 21% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in AYR heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Diamond Hill Capital, led by Ric Dillon, holds the number one position in Aircastle Limited (NYSE:AYR). According to regulatory filings, the fund has a $56.2 million position in the stock, comprising 0.3% of its 13F portfolio. On Diamond Hill Capital’s heels is Edward Goodnow of Goodnow Investment Group, with a $36.7 million position; the fund has 8.7% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish contain Millennium Management, one of the largest hedge funds in the world, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group. 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.

Seeing as Aircastle Limited (NYSE:AYR) has gone through falling interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedge funds who sold off their entire stakes last quarter. Interestingly, Neil Chriss’s Hutchin Hill Capital cut the biggest investment of all the investors watched by Insider Monkey, valued at about $1 million in stock. Michael Platt and William Reeves’s fund, BlueCrest Capital Mgmt., also cut its stock, about $0.6 million worth of shares.

Let’s go over hedge fund activity in other stocks similar to Aircastle Limited (NYSE:AYR). These stocks are FCB Financial Holdings Inc (NYSE:FCB), American Equity Investment Life Holding (NYSE:AEL), Envestnet Inc (NYSE:ENV), and Alliance Holdings GP, L.P. (NASDAQ:AHGP). This group of stocks’ market values match AYR’s market value.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $110 million in AYR’s case. FCB Financial Holdings Inc (NYSE:FCB) is the most popular stock in this table. On the other hand Alliance Holdings GP, L.P. (NASDAQ:AHGP) is the least popular one with only 4 bullish hedge fund positions. Aircastle Limited (NYSE:AYR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FCB might be a better candidate to consider taking a long position in.

Disclosure: none.