In this article we will take a look at whether hedge funds think J&J Snack Foods Corp. (NASDAQ:JJSF) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
J&J Snack Foods Corp. (NASDAQ:JJSF) shareholders have witnessed an increase in hedge fund interest of late. Our calculations also showed that JJSF 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.
At the moment there are numerous tools market participants put to use to size up stocks. Two of the most useful tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the elite investment managers can outpace the market by a significant margin (see the details here).
[caption id="attachment_189632" align="aligncenter" width="400"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a look at the new hedge fund action encompassing J&J Snack Foods Corp. (NASDAQ:JJSF).
Hedge fund activity in J&J Snack Foods Corp. (NASDAQ:JJSF)
Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in JJSF over the last 18 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in J&J Snack Foods Corp. (NASDAQ:JJSF), which was worth $40 million at the end of the third quarter. On the second spot was Millennium Management which amassed $11.7 million worth of shares. Citadel Investment Group, Winton Capital Management, and GAMCO Investors 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 Algert Coldiron Investors allocated the biggest weight to J&J Snack Foods Corp. (NASDAQ:JJSF), around 0.83% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.15 percent of its 13F equity portfolio to JJSF.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, assembled the most outsized position in J&J Snack Foods Corp. (NASDAQ:JJSF). Algert Coldiron Investors had $2 million invested in the company at the end of the quarter. Peter Muller's PDT Partners also made a $0.7 million investment in the stock during the quarter. The following funds were also among the new JJSF investors: Greg Eisner's Engineers Gate Manager, Lee Ainslie's Maverick Capital, and Michael Gelband's ExodusPoint Capital.
Let's go over hedge fund activity in other stocks similar to J&J Snack Foods Corp. (NASDAQ:JJSF). These stocks are Valmont Industries, Inc. (NYSE:VMI), Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), Kohl's Corporation (NYSE:KSS), and UMB Financial Corporation (NASDAQ:UMBF). All of these stocks' market caps resemble JJSF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VMI,24,218687,0 DCPH,28,603787,0 KSS,26,145325,-2 UMBF,15,46125,-4 Average,23.25,253481,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $253 million. That figure was $83 million in JJSF's case. Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) is the most popular stock in this table. On the other hand UMB Financial Corporation (NASDAQ:UMBF) is the least popular one with only 15 bullish hedge fund positions. J&J Snack Foods Corp. (NASDAQ:JJSF) 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 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 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately JJSF wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); JJSF investors were disappointed as the stock returned 4.8% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.