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Is Jagged Peak Energy Inc. (JAG) Going To Burn These Hedge Funds ?

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Jagged Peak Energy Inc. (NYSE:JAG).

Is Jagged Peak Energy Inc. (NYSE:JAG) a bargain? Money managers are becoming more confident. The number of long hedge fund bets advanced by 1 lately. Our calculations also showed that JAG isn't among the 30 most popular stocks among hedge funds (see the video below). JAG was in 13 hedge funds' portfolios at the end of the second quarter of 2019. There were 12 hedge funds in our database with JAG positions at the end of the previous quarter.

5 Most Popular Stocks Among Hedge Funds
5 Most Popular Stocks Among Hedge Funds

Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

If you'd ask most stock holders, hedge funds are viewed as worthless, old investment tools of the past. While there are over 8000 funds with their doors open today, Our researchers hone in on the aristocrats of this club, about 750 funds. These investment experts command most of all hedge funds' total asset base, and by tailing their matchless stock picks, Insider Monkey has revealed many investment strategies that have historically beaten the market. Insider Monkey's flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

JAG_oct2019
JAG_oct2019

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. Let's take a gander at the recent hedge fund action encompassing Jagged Peak Energy Inc. (NYSE:JAG).

What have hedge funds been doing with Jagged Peak Energy Inc. (NYSE:JAG)?

At Q2's end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in JAG a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Jonathan Barrett Luminus Management
Jonathan Barrett Luminus Management

More specifically, Deep Basin Capital was the largest shareholder of Jagged Peak Energy Inc. (NYSE:JAG), with a stake worth $64.9 million reported as of the end of March. Trailing Deep Basin Capital was Encompass Capital Advisors, which amassed a stake valued at $33.7 million. Luminus Management, Adage Capital Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.

As industrywide interest jumped, key hedge funds were breaking ground themselves. SIR Capital Management, managed by Vince Maddi and Shawn Brennan, initiated the most valuable position in Jagged Peak Energy Inc. (NYSE:JAG). SIR Capital Management had $3 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $0.2 million position during the quarter. The other funds with brand new JAG positions are Roger Ibbotson's Zebra Capital Management and David Harding's Winton Capital Management.

Let's also examine hedge fund activity in other stocks similar to Jagged Peak Energy Inc. (NYSE:JAG). We will take a look at USANA Health Sciences, Inc. (NYSE:USNA), Tower Semiconductor Ltd. (NASDAQ:TSEM), Goosehead Insurance, Inc. (NASDAQ:GSHD), and Portola Pharmaceuticals Inc (NASDAQ:PTLA). This group of stocks' market caps are closest to JAG's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position USNA,13,248443,-9 TSEM,11,236662,-1 GSHD,7,30448,3 PTLA,18,263264,-2 Average,12.25,194704,-2.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $195 million. That figure was $147 million in JAG's case. Portola Pharmaceuticals Inc (NASDAQ:PTLA) is the most popular stock in this table. On the other hand Goosehead Insurance, Inc. (NASDAQ:GSHD) is the least popular one with only 7 bullish hedge fund positions. Jagged Peak Energy Inc. (NYSE:JAG) 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. 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 JAG wasn't nearly as popular as these 20 stocks and hedge funds that were betting on JAG were disappointed as the stock returned -12.2% 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 this year.

Disclosure: None. This article was originally published at Insider Monkey.

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