Coronavirus is probably the #1 concern in investors' minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 835 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31 holdings, data that is available nowhere else. Should you consider J&J Snack Foods Corp. (NASDAQ:JJSF) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is J&J Snack Foods Corp. (NASDAQ:JJSF) ready to rally soon? Hedge funds are becoming less hopeful. The number of long hedge fund positions were cut by 7 recently. Our calculations also showed that JJSF isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). JJSF was in 13 hedge funds' portfolios at the end of the fourth quarter of 2019. There were 20 hedge funds in our database with JJSF positions at the end of the previous quarter.
In the eyes of most traders, hedge funds are assumed to be slow, old financial tools of years past. While there are more than 8000 funds with their doors open at present, Our experts look at the moguls of this club, about 850 funds. These investment experts command the lion's share of all hedge funds' total capital, and by keeping an eye on their highest performing equity investments, Insider Monkey has revealed a few investment strategies that have historically outrun the broader indices. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_27480" align="aligncenter" width="400"] Israel Englander of Millennium Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Now let's take a peek at the fresh hedge fund action regarding J&J Snack Foods Corp. (NASDAQ:JJSF).
How are hedge funds trading J&J Snack Foods Corp. (NASDAQ:JJSF)?
Heading into the first quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -35% from the third quarter of 2019. By comparison, 10 hedge funds held shares or bullish call options in JJSF a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in J&J Snack Foods Corp. (NASDAQ:JJSF) was held by Renaissance Technologies, which reported holding $62.6 million worth of stock at the end of September. It was followed by Millennium Management with a $20.5 million position. Other investors bullish on the company included Winton Capital Management, GAMCO Investors, and GLG Partners. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to J&J Snack Foods Corp. (NASDAQ:JJSF), around 0.12% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, setting aside 0.08 percent of its 13F equity portfolio to JJSF.
Because J&J Snack Foods Corp. (NASDAQ:JJSF) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there was a specific group of money managers that slashed their full holdings last quarter. At the top of the heap, Benjamin A. Smith's Laurion Capital Management cut the largest investment of all the hedgies monitored by Insider Monkey, worth about $0.8 million in stock. Peter Algert and Kevin Coldiron's fund, Algert Coldiron Investors, also dumped its stock, about $0.6 million worth. These transactions are interesting, as total hedge fund interest fell by 7 funds last quarter.
Let's go over hedge fund activity in other stocks similar to J&J Snack Foods Corp. (NASDAQ:JJSF). These stocks are Energizer Holdings, Inc. (NYSE:ENR), Corelogic Inc (NYSE:CLGX), BankUnited (NYSE:BKU), and AVX Corporation (NYSE:AVX). This group of stocks' market valuations are similar to JJSF's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ENR,22,193079,3 CLGX,28,383328,-3 BKU,25,356297,1 AVX,14,102611,1 Average,22.25,258829,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $259 million. That figure was $121 million in JJSF's case. Corelogic Inc (NYSE:CLGX) is the most popular stock in this table. On the other hand AVX Corporation (NYSE:AVX) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks J&J Snack Foods Corp. (NASDAQ:JJSF) is even less popular than AVX. Hedge funds dodged a bullet by taking a bearish stance towards JJSF. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but managed to beat the market by 5.5 percentage points. Unfortunately JJSF wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); JJSF investors were disappointed as the stock returned -35.3% 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 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.