In this article we will check out the progression of hedge fund sentiment towards John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS) a safe stock to buy now? Prominent investors are turning less bullish. The number of bullish hedge fund positions were cut by 3 in recent months. Our calculations also showed that JBSS 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). JBSS was in 14 hedge funds' portfolios at the end of March. There were 17 hedge funds in our database with JBSS holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are a large number of methods market participants employ to value publicly traded companies. A pair of the less known methods are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can outpace the market by a healthy amount (see the details here).
[caption id="attachment_30600" align="aligncenter" width="399"] Bruce Kovner of Caxton Associates LP[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to analyze the new hedge fund action regarding John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS).
How are hedge funds trading John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS)?
At Q1's end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards JBSS over the last 18 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS) was held by Royce & Associates, which reported holding $18.8 million worth of stock at the end of September. It was followed by AQR Capital Management with a $15.3 million position. Other investors bullish on the company included Renaissance Technologies, Citadel Investment Group, and Winton Capital Management. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS), around 0.26% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.08 percent of its 13F equity portfolio to JBSS.
Due to the fact that John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS) has witnessed bearish sentiment from the smart money, it's easy to see that there is a sect of hedgies that elected to cut their entire stakes in the first quarter. Interestingly, Donald Sussman's Paloma Partners said goodbye to the largest investment of the "upper crust" of funds followed by Insider Monkey, comprising an estimated $0.9 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund said goodbye to about $0.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 3 funds in the first quarter.
Let's now review hedge fund activity in other stocks similar to John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS). These stocks are SITE Centers Corp. (NYSE:SITC), Grupo Financiero Galicia S.A. (NASDAQ:GGAL), Calavo Growers, Inc. (NASDAQ:CVGW), and NextCure, Inc. (NASDAQ:NXTC). This group of stocks' market caps match JBSS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SITC,21,47296,-1 GGAL,6,12134,-2 CVGW,11,63039,-12 NXTC,14,235494,-3 Average,13,89491,-4.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $63 million in JBSS's case. SITE Centers Corp. (NYSE:SITC) is the most popular stock in this table. On the other hand Grupo Financiero Galicia S.A. (NASDAQ:GGAL) is the least popular one with only 6 bullish hedge fund positions. John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS) 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 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately JBSS wasn't nearly as popular as these 10 stocks and hedge funds that were betting on JBSS were disappointed as the stock returned -6.5% 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 10 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.