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Hedge Funds Are Coming Back To Aerojet Rocketdyne Holdings Inc (AJRD)

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We at Insider Monkey have gone over 867 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) based on that data.

Is Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) undervalued? The smart money was in a bullish mood. The number of bullish hedge fund positions advanced by 4 in recent months. Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) was in 33 hedge funds' portfolios at the end of September. The all time high for this statistic is 36. Our calculations also showed that AJRD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Mario Gabelli of GAMCO Investors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let's check out the recent hedge fund action encompassing Aerojet Rocketdyne Holdings Inc (NYSE:AJRD).

Do Hedge Funds Think AJRD Is A Good Stock To Buy Now?

At third quarter's end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the second quarter of 2021. By comparison, 26 hedge funds held shares or bullish call options in AJRD a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is AJRD A Good Stock To Buy?
Is AJRD A Good Stock To Buy?

The largest stake in Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) was held by Steel Partners, which reported holding $172 million worth of stock at the end of September. It was followed by Magnetar Capital with a $118.9 million position. Other investors bullish on the company included Alpine Associates, GAMCO Investors, and Melqart Asset Management. In terms of the portfolio weights assigned to each position Steel Partners allocated the biggest weight to Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), around 45.59% of its 13F portfolio. Melqart Asset Management is also relatively very bullish on the stock, setting aside 4.26 percent of its 13F equity portfolio to AJRD.

As aggregate interest increased, key money managers were leading the bulls' herd. Sand Grove Capital Partners, managed by Simon Davies, assembled the biggest position in Aerojet Rocketdyne Holdings Inc (NYSE:AJRD). Sand Grove Capital Partners had $4.5 million invested in the company at the end of the quarter. Wayne Yu's BCK Capital also made a $4.3 million investment in the stock during the quarter. The other funds with brand new AJRD positions are Orkun Kilic's Berry Street Capital, Carl Tiedemann and Michael Tiedemann's TIG Advisors, and Lee Ainslie's Maverick Capital.

Let's now take a look at 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 LGI Homes Inc (NASDAQ:LGIH), Rogers Corporation (NYSE:ROG), Surgery Partners, Inc. (NASDAQ:SGRY), Phillips Edison & Company Inc. (NASDAQ:PECO), New Oriental Education & Technology Group Inc. (NYSE:EDU), Applied Industrial Technologies Inc (NYSE:AIT), and The Beauty Health Company (NASDAQ:SKIN). All of these stocks' market caps are similar to AJRD's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LGIH,15,47693,-2 ROG,14,152797,-2 SGRY,17,76349,6 PECO,15,118830,15 EDU,32,389584,-7 AIT,17,85253,-1 SKIN,39,865397,6 Average,21.3,247986,2.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $248 million. That figure was $765 million in AJRD's case. The Beauty Health Company (NASDAQ:SKIN) is the most popular stock in this table. On the other hand Rogers Corporation (NYSE:ROG) is the least popular one with only 14 bullish hedge fund positions. Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AJRD is 74.5. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately AJRD wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AJRD were disappointed as the stock returned -3.5% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.