Smart Money Is Gaining Confidence In AAR Corp. (AIR)

Is AAR Corp. (NYSE:AIR) 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, expert networks, and get tips from industry insiders. They fail miserably sometimes, but historically their consensus stock picks outperformed the market after adjusting for known risk factors.

AAR Corp. (NYSE:AIR) investors should pay attention to an increase in activity from the world’s largest hedge funds lately. AAR Corp. (NYSE:AIR) was in 22 hedge funds’ portfolios at the end of the third quarter of 2015. There were 15 hedge funds in our database with AAR Corp. (NYSE:AIR) holdings at the end of the previous quarter. At the end of this article, we will also compare AAR Corp. (NYSE:AIR) to other stocks, including CenterState Banks Inc (NASDAQ:CSFL), ArcBest Corp (NASDAQ:ARCB), and Baytex Energy Corp (USA) (NYSE:BTE) to get a better sense of its popularity.

Today there are dozens of signals stock market investors put to use to assess publicly traded companies. A couple of the most under-the-radar signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top investment managers can outpace the market by a superb margin (see the details here).

Keeping this in mind, we’re going to go over the key action regarding AAR Corp. (NYSE:AIR).

How are hedge funds trading AAR Corp. (NYSE:AIR)?

Heading into Q4, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 47% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund and institutional investor database, Fisher Asset Management, led by Ken Fisher, holds the most valuable position in AAR Corp. (NYSE:AIR). Fisher Asset Management has a $19.7 million position in the stock, comprising less than 0.1% of its 13F portfolio. On Fisher Asset Management’s heels is David Dreman’s Dreman Value Management, with a $6.9 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism comprise Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Steve Cohen’s Point72 Asset Management.

Now, some big names were leading the bulls’ herd. Millennium Management initiated the most valuable position in AAR Corp. (NYSE:AIR). Millennium Management had $3.9 million invested in the company at the end of the quarter. Arrowstreet Capital also made a $2.6 million investment in the stock during the quarter. The other funds with brand new AAR Corp. (NYSE:AIR) positions are Ken Griffin’s Citadel Investment Group, David Costen Haley’s HBK Investments, and Chao Ku’s Nine Chapters Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as AAR Corp. (NYSE:AIR) but similarly valued. These stocks are CenterState Banks Inc (NASDAQ:CSFL), ArcBest Corp (NASDAQ:ARCB), Baytex Energy Corp (USA) (NYSE:BTE), and First NBC Bank Holding Company (NASDAQ:FNBC). This group of stocks’ market values is closest to AAR Corp. (NYSE:AIR)’s market value.

As you can see, these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. Among these stocks, ArcBest Corp (NASDAQ:ARCB) bagged the largest number of hedge fund holdings, 17, whereas First NBC Bank Holding Company (NASDAQ:FNBC) witnessed a negative investor sentiment, losing hedge fund holdings by 2 to 10 hedge funds only. Compared to these stocks AAR Corp. (NYSE:AIR) is more popular among hedge funds, with an aggregate value of holdings of $51 million. Considering that hedge funds are fond of this stock compared to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.