Is Rayonier Inc. (NYSE:RYN) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Rayonier Inc. (NYSE:RYN) the right investment to pursue these days? The smart money is taking a bearish view. The number of bullish hedge fund bets were trimmed by 1 in recent months. Our calculations also showed that RYN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to analyze the recent hedge fund action encompassing Rayonier Inc. (NYSE:RYN).
Hedge fund activity in Rayonier Inc. (NYSE:RYN)
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in RYN a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the number one position in Rayonier Inc. (NYSE:RYN). Renaissance Technologies has a $121 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Ian Simm of Impax Asset Management, with a $111.2 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Other peers that hold long positions consist of Martin Whitman’s Third Avenue Management, Greg Poole’s Echo Street Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to Rayonier Inc. (NYSE:RYN), around 4.7% of its 13F portfolio. Impax Asset Management is also relatively very bullish on the stock, dishing out 1.45 percent of its 13F equity portfolio to RYN.
Judging by the fact that Rayonier Inc. (NYSE:RYN) has witnessed bearish sentiment from the smart money, logic holds that there lies a certain “tier” of fund managers that elected to cut their full holdings last quarter. Intriguingly, Steve Cohen’s Point72 Asset Management dumped the biggest stake of all the hedgies watched by Insider Monkey, totaling close to $11.3 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace was right behind this move, as the fund dumped about $2.2 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Rayonier Inc. (NYSE:RYN) but similarly valued. We will take a look at Wintrust Financial Corporation (NASDAQ:WTFC), ACI Worldwide Inc (NASDAQ:ACIW), Texas Roadhouse Inc (NASDAQ:TXRH), and YPF Sociedad Anonima (NYSE:YPF). This group of stocks’ market valuations are similar to RYN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WTFC | 19 | 285013 | -4 |
| ACIW | 21 | 295588 | -2 |
| TXRH | 22 | 225889 | -1 |
| YPF | 18 | 99931 | 3 |
| Average | 20 | 226605 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $227 million. That figure was $317 million in RYN’s case. Texas Roadhouse Inc (NASDAQ:TXRH) is the most popular stock in this table. On the other hand YPF Sociedad Anonima (NYSE:YPF) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Rayonier Inc. (NYSE:RYN) is even less popular than YPF. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on RYN, though not to the same extent, as the stock returned 8.6% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
