Were Hedge Funds Right About Betting On Rayonier Inc. (RYN)?

·6 min read

In this article you are going to find out whether hedge funds think Rayonier Inc. (NYSE:RYN) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Rayonier Inc. (NYSE:RYN) has seen an increase in activity from the world's largest hedge funds of late. Rayonier Inc. (NYSE:RYN) was in 18 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 20. There were 16 hedge funds in our database with RYN positions at the end of the fourth quarter. Our calculations also showed that RYN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Dmitry Balyasny of Balyasny Asset Managemnet
Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Now let's take a peek at the new hedge fund action surrounding Rayonier Inc. (NYSE:RYN).

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

Heading into the second quarter of 2021, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RYN over the last 23 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is RYN A Good Stock To Buy?
Is RYN A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Impax Asset Management, managed by Ian Simm, holds the number one position in Rayonier Inc. (NYSE:RYN). Impax Asset Management has a $287.4 million position in the stock, comprising 1.5% of its 13F portfolio. On Impax Asset Management's heels is Renaissance Technologies, which holds a $49.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions consist of Matthew Stadelman's Diamond Hill Capital, Martin Whitman's Third Avenue Management and Dmitry Balyasny's Balyasny Asset Management. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to Rayonier Inc. (NYSE:RYN), around 3.62% of its 13F portfolio. Impax Asset Management is also relatively very bullish on the stock, dishing out 1.47 percent of its 13F equity portfolio to RYN.

Consequently, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, assembled the most valuable position in Rayonier Inc. (NYSE:RYN). Citadel Investment Group had $2.1 million invested in the company at the end of the quarter. Mark McMeans's Brasada Capital Management also made a $1.7 million investment in the stock during the quarter. The following funds were also among the new RYN investors: Paul Tudor Jones's Tudor Investment Corp, Michael Gelband's ExodusPoint Capital, and Bruce Kovner's Caxton Associates LP.

Let's go over hedge fund activity in other stocks similar to Rayonier Inc. (NYSE:RYN). We will take a look at DigitalOcean Holdings, Inc. (NYSE:DOCN), Diversey Holdings, Ltd. (NASDAQ:DSEY), Schneider National, Inc. (NYSE:SNDR), Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), Sunnova Energy International Inc. (NYSE:NOVA), Ormat Technologies, Inc. (NYSE:ORA), and Everbridge, Inc. (NASDAQ:EVBG). This group of stocks' market caps match RYN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DOCN,22,197674,22 DSEY,21,284464,21 SNDR,19,127648,-1 BHVN,33,359789,-6 NOVA,26,327923,-6 ORA,17,251963,1 EVBG,49,1083099,13 Average,26.7,376080,6.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $376 million. That figure was $429 million in RYN's case. Everbridge, Inc. (NASDAQ:EVBG) is the most popular stock in this table. On the other hand Ormat Technologies, Inc. (NYSE:ORA) is the least popular one with only 17 bullish hedge fund positions. Rayonier Inc. (NYSE:RYN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RYN is 35.6. 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 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 28.5% in 2021 through July 23rd and beat the market by 10.1 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 15.7% since the end of Q1 (through July 23rd) and outperformed the market.

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

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