Did Hedge Funds Make The Right Call On Juniper Industrial Holdings, Inc. (JIH) ?
We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Juniper Industrial Holdings, Inc. (NYSE:JIH) and determine whether hedge funds skillfully traded this stock.
Is Juniper Industrial Holdings, Inc. (NYSE:JIH) ready to rally soon? Money managers were buying. The number of bullish hedge fund positions rose by 1 lately. Our calculations also showed that JIH isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Paul Glazer of Glazer Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. With Federal Reserve creating trillions of dollars out of thin air, we believe gold prices will keep increasing. So, we are checking out gold stocks like this small gold mining company. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind let's take a look at the key hedge fund action encompassing Juniper Industrial Holdings, Inc. (NYSE:JIH).
How have hedgies been trading Juniper Industrial Holdings, Inc. (NYSE:JIH)?
At Q1's end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the fourth quarter of 2019. On the other hand, there were a total of 0 hedge funds with a bullish position in JIH a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Magnetar Capital held the most valuable stake in Juniper Industrial Holdings, Inc. (NYSE:JIH), which was worth $16.7 million at the end of the third quarter. On the second spot was Glazer Capital which amassed $15.7 million worth of shares. BlueCrest Capital Mgmt., Millennium Management, and Scopus Asset Management 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 Cobalt Capital Management allocated the biggest weight to Juniper Industrial Holdings, Inc. (NYSE:JIH), around 2.64% of its 13F portfolio. Bulldog Investors is also relatively very bullish on the stock, earmarking 1.15 percent of its 13F equity portfolio to JIH.
Consequently, specific money managers were breaking ground themselves. Glazer Capital, managed by Paul Glazer, assembled the most valuable position in Juniper Industrial Holdings, Inc. (NYSE:JIH). Glazer Capital had $15.7 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $5.8 million position during the quarter. The other funds with new positions in the stock are Anand Parekh's Alyeska Investment Group, Wayne Cooperman's Cobalt Capital Management, and Greg Poole's Echo Street Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Juniper Industrial Holdings, Inc. (NYSE:JIH) but similarly valued. These stocks are BeyondSpring, Inc. (NASDAQ:BYSI), Mitek Systems, Inc. (NASDAQ:MITK), Surgery Partners, Inc. (NASDAQ:SGRY), and Dorchester Minerals LP (NASDAQ:DMLP). This group of stocks' market values are closest to JIH's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BYSI,1,256,0 MITK,17,62636,-2 SGRY,10,30221,-1 DMLP,6,15276,1 Average,8.5,27097,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $115 million in JIH's case. Mitek Systems, Inc. (NASDAQ:MITK) is the most popular stock in this table. On the other hand BeyondSpring, Inc. (NASDAQ:BYSI) is the least popular one with only 1 bullish hedge fund positions. Juniper Industrial Holdings, Inc. (NYSE:JIH) is not the most popular stock in this group but hedge fund interest is still above average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th but beat the market by 17.1 percentage points. Unfortunately JIH wasn't nearly as popular as these 10 stocks and hedge funds that were betting on JIH were disappointed as the stock returned 7.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
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