With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was South Jersey Industries Inc (NYSE:SJI).
Is South Jersey Industries Inc (NYSE:SJI) ready to rally soon? The smart money is in a bullish mood. The number of bullish hedge fund positions rose by 2 in recent months. Our calculations also showed that SJI isn't among the 30 most popular stocks among hedge funds (see the video below). SJI was in 13 hedge funds' portfolios at the end of June. There were 11 hedge funds in our database with SJI positions at the end of the previous quarter. Video: Click the image to 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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a look at the recent hedge fund action regarding South Jersey Industries Inc (NYSE:SJI).
Hedge fund activity in South Jersey Industries Inc (NYSE:SJI)
At the end of the second quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in SJI a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Diamond Hill Capital held the most valuable stake in South Jersey Industries Inc (NYSE:SJI), which was worth $36.7 million at the end of the second quarter. On the second spot was Ancora Advisors which amassed $11.2 million worth of shares. Moreover, Citadel Investment Group, Citadel Investment Group, and Renaissance Technologies were also bullish on South Jersey Industries Inc (NYSE:SJI), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key hedge funds have jumped into South Jersey Industries Inc (NYSE:SJI) headfirst. Citadel Investment Group, managed by Ken Griffin, established the largest position in South Jersey Industries Inc (NYSE:SJI). Citadel Investment Group had $8 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser's Magnetar Capital also initiated a $2.1 million position during the quarter. The other funds with brand new SJI positions are D. E. Shaw's D E Shaw, Paul Tudor Jones's Tudor Investment Corp, and Mike Vranos's Ellington.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as South Jersey Industries Inc (NYSE:SJI) but similarly valued. We will take a look at SkyWest, Inc. (NASDAQ:SKYW), Amicus Therapeutics, Inc. (NASDAQ:FOLD), Commscope Holding Company Inc (NASDAQ:COMM), and Sensient Technologies Corporation (NYSE:SXT). This group of stocks' market caps are similar to SJI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SKYW,13,197438,0 FOLD,29,1059406,-1 COMM,20,811446,-3 SXT,12,52368,4 Average,18.5,530165,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $530 million. That figure was $70 million in SJI's case. Amicus Therapeutics, Inc. (NASDAQ:FOLD) is the most popular stock in this table. On the other hand Sensient Technologies Corporation (NYSE:SXT) is the least popular one with only 12 bullish hedge fund positions. South Jersey Industries Inc (NYSE:SJI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately SJI wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SJI investors were disappointed as the stock returned -1.6% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.