With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was Aerojet Rocketdyne Holdings Inc (NYSE:AJRD).
Is AJRD stock a buy? Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) investors should be aware of an increase in support from the world’s most elite money managers in recent months. Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) was in 36 hedge funds’ portfolios at the end of December. The all time high for this statistic is 27. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 26 hedge funds in our database with AJRD holdings at the end of September. Our calculations also showed that AJRD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Clint Carlson of Carlson Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to go over the fresh hedge fund action surrounding Aerojet Rocketdyne Holdings Inc (NYSE:AJRD).
Do Hedge Funds Think AJRD Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in AJRD a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Among these funds, Steel Partners held the most valuable stake in Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), which was worth $208.8 million at the end of the fourth quarter. On the second spot was GAMCO Investors which amassed $170 million worth of shares. Magnetar Capital, Millennium Management, and Water Island 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 Steel Partners allocated the biggest weight to Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), around 72.56% of its 13F portfolio. Halcyon Asset Management is also relatively very bullish on the stock, earmarking 2.28 percent of its 13F equity portfolio to AJRD.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Magnetar Capital, managed by Alec Litowitz and Ross Laser, established the most outsized position in Aerojet Rocketdyne Holdings Inc (NYSE:AJRD). Magnetar Capital had $122.3 million invested in the company at the end of the quarter. John Orrico’s Water Island Capital also initiated a $29.3 million position during the quarter. The following funds were also among the new AJRD investors: Richard Gerson and Navroz D. Udwadia’s Falcon Edge Capital, John Bader’s Halcyon Asset Management, and Clint Carlson’s Carlson Capital.
Let’s go over 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 Park Hotels & Resorts Inc. (NYSE:PK), The Hain Celestial Group, Inc. (NASDAQ:HAIN), Kornit Digital Ltd. (NASDAQ:KRNT), Healthcare Realty Trust Inc (NYSE:HR), Blackstone Mortgage Trust Inc (NYSE:BXMT), Arvinas, Inc. (NASDAQ:ARVN), and Rayonier Inc. (NYSE:RYN). This group of stocks’ market valuations match AJRD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PK | 13 | 112554 | -4 |
| HAIN | 23 | 964598 | 2 |
| KRNT | 15 | 104173 | -3 |
| HR | 23 | 172649 | 5 |
| BXMT | 17 | 141563 | -7 |
| ARVN | 34 | 810897 | 8 |
| RYN | 16 | 384072 | -1 |
| Average | 20.1 | 384358 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $384 million. That figure was $802 million in AJRD’s case. Arvinas, Inc. (NASDAQ:ARVN) is the most popular stock in this table. On the other hand Park Hotels & Resorts Inc. (NYSE:PK) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) is more popular among hedge funds. Our overall hedge fund sentiment score for AJRD is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Unfortunately AJRD wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on AJRD were disappointed as the stock returned -10.7% since the end of the fourth quarter (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Aerojet Rocketdyne Holdings Inc. (NYSE:AJRD)
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Disclosure: None. This article was originally published at Insider Monkey.
