How do we determine whether South Jersey Industries Inc (NYSE:SJI) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
South Jersey Industries Inc (NYSE:SJI) has seen an increase in support from the world's most elite money managers lately. Our calculations also showed that SJI isn't among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a glance at the latest hedge fund action surrounding South Jersey Industries Inc (NYSE:SJI).
What have hedge funds been doing with South Jersey Industries Inc (NYSE:SJI)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the second quarter of 2018. By comparison, 9 hedge funds held shares or bullish call options in SJI heading into this year. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of South Jersey Industries Inc (NYSE:SJI), with a stake worth $24.8 million reported as of the end of September. Trailing Renaissance Technologies was Oaktree Capital Management, which amassed a stake valued at $16.8 million. Ancora Advisors, Citadel Investment Group, and Blackstart Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, specific money managers were breaking ground themselves. Oaktree Capital Management, managed by Howard Marks, assembled the largest position in South Jersey Industries Inc (NYSE:SJI). Oaktree Capital Management had $16.8 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also initiated a $1.8 million position during the quarter. The other funds with new positions in the stock are Michael Platt and William Reeves's BlueCrest Capital Mgmt., John Overdeck and David Siegel's Two Sigma Advisors, and Andrew Feldstein and Stephen Siderow's Blue Mountain Capital.
Let's also examine hedge fund activity in other stocks similar to South Jersey Industries Inc (NYSE:SJI). These stocks are South State Corporation (NASDAQ:SSB), II-VI, Inc. (NASDAQ:IIVI), iRobot Corporation (NASDAQ:IRBT), and Akcea Therapeutics, Inc. (NASDAQ:AKCA). This group of stocks' market caps match SJI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SSB,15,136234,-1 IIVI,13,121512,-3 IRBT,10,85542,0 AKCA,6,34465,4 Average,11,94438,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $93 million in SJI's case. South State Corporation (NASDAQ:SSB) is the most popular stock in this table. On the other hand Akcea Therapeutics, Inc. (NASDAQ:AKCA) is the least popular one with only 6 bullish hedge fund positions. South Jersey Industries Inc (NYSE:SJI) 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. In this regard SSB might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.