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We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money 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 (like Melvin Capital's recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Jabil Inc. (NYSE:JBL).
Is JBL a good stock to buy? The smart money was betting on the stock. The number of long hedge fund positions went up by 2 lately. Jabil Inc. (NYSE:JBL) was in 26 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 34. Our calculations also showed that JBL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 24 hedge funds in our database with JBL holdings at the end of March.
At the moment there are numerous methods investors can use to assess stocks. Some of the most useful methods are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the broader indices by a solid margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Michael Gelband of ExodusPoint Capital
With all of this in mind we're going to take a glance at the new hedge fund action surrounding Jabil Inc. (NYSE:JBL).
Do Hedge Funds Think JBL Is A Good Stock To Buy Now?
At second quarter's end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. On the other hand, there were a total of 31 hedge funds with a bullish position in JBL a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Steve Cohen's Point72 Asset Management has the biggest position in Jabil Inc. (NYSE:JBL), worth close to $199.9 million, accounting for 0.9% of its total 13F portfolio. On Point72 Asset Management's heels is Israel Englander of Millennium Management, with a $69.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions contain Phill Gross and Robert Atchinson's Adage Capital Management, Cliff Asness's AQR Capital Management and Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital. In terms of the portfolio weights assigned to each position Force Hill Capital Management allocated the biggest weight to Jabil Inc. (NYSE:JBL), around 2.17% of its 13F portfolio. Shellback Capital is also relatively very bullish on the stock, dishing out 2.03 percent of its 13F equity portfolio to JBL.
Consequently, some big names were breaking ground themselves. Shellback Capital, managed by Doug Gordon, Jon Hilsabeck and Don Jabro, assembled the most valuable position in Jabil Inc. (NYSE:JBL). Shellback Capital had $37.5 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $8.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Mikal Patel's Oribel Capital Management, Ray Dalio's Bridgewater Associates, and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Jabil Inc. (NYSE:JBL) but similarly valued. We will take a look at Ares Capital Corporation (NASDAQ:ARCC), Arrowhead Pharmaceuticals Inc. (NASDAQ:ARWR), Skillz Inc. (NYSE:SKLZ), Kohl's Corporation (NYSE:KSS), Oshkosh Corporation (NYSE:OSK), Autoliv Inc. (NYSE:ALV), and Omega Healthcare Investors Inc (NYSE:OHI). All of these stocks' market caps are similar to JBL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARCC,12,86611,-3 ARWR,30,211148,10 SKLZ,20,1137649,-6 KSS,40,1340630,5 OSK,28,360479,2 ALV,23,860834,3 OHI,20,142609,-5 Average,24.7,591423,0.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $591 million. That figure was $514 million in JBL's case. Kohl's Corporation (NYSE:KSS) is the most popular stock in this table. On the other hand Ares Capital Corporation (NASDAQ:ARCC) is the least popular one with only 12 bullish hedge fund positions. Jabil Inc. (NYSE:JBL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JBL is 54.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on JBL as the stock returned 7.4% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.