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Is JRVR A Good Stock To Buy Now?

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Asma UL Husna
·6 min read
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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on James River Group Holdings Ltd (NASDAQ:JRVR).

Is JRVR a good stock to buy now? James River Group Holdings Ltd (NASDAQ:JRVR) was in 14 hedge funds' portfolios at the end of September. The all time high for this statistic is 15. JRVR investors should be aware of an increase in activity from the world's largest hedge funds of late. There were 10 hedge funds in our database with JRVR positions at the end of the second quarter. Our calculations also showed that JRVR isn't among the 30 most popular stocks among hedge funds (click for Q3 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Michael Gelband of ExodusPoint Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let's take a glance at the latest hedge fund action regarding James River Group Holdings Ltd (NASDAQ:JRVR).

Do Hedge Funds Think JRVR Is A Good Stock To Buy Now?

At Q3's end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards JRVR over the last 21 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Royce & Associates was the largest shareholder of James River Group Holdings Ltd (NASDAQ:JRVR), with a stake worth $26.7 million reported as of the end of September. Trailing Royce & Associates was Polar Capital, which amassed a stake valued at $24.5 million. Renaissance Technologies, Driehaus Capital, and ExodusPoint Capital 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 Capital Returns Management allocated the biggest weight to James River Group Holdings Ltd (NASDAQ:JRVR), around 9.2% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, designating 0.32 percent of its 13F equity portfolio to JRVR.

As aggregate interest increased, specific money managers have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, assembled the most outsized position in James River Group Holdings Ltd (NASDAQ:JRVR). ExodusPoint Capital had $5.1 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.6 million investment in the stock during the quarter. The following funds were also among the new JRVR investors: Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Mika Toikka's AlphaCrest Capital Management.

Let's also examine hedge fund activity in other stocks similar to James River Group Holdings Ltd (NASDAQ:JRVR). We will take a look at Trustmark Corp (NASDAQ:TRMK), Resideo Technologies, Inc. (NYSE:REZI), Monmouth Real Estate Investment Corp. (NYSE:MNR), Sleep Number Corporation (NASDAQ:SNBR), CSG Systems International, Inc. (NASDAQ:CSGS), Monro Inc (NASDAQ:MNRO), and Marten Transport, Ltd (NASDAQ:MRTN). This group of stocks' market valuations are closest to JRVR's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TRMK,18,30182,1 REZI,23,315692,3 MNR,16,67392,6 SNBR,21,146469,2 CSGS,22,153213,0 MNRO,14,18079,3 MRTN,19,58010,0 Average,19,112720,2.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $113 million. That figure was $106 million in JRVR's case. Resideo Technologies, Inc. (NYSE:REZI) is the most popular stock in this table. On the other hand Monro Inc (NASDAQ:MNRO) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks James River Group Holdings Ltd (NASDAQ:JRVR) is even less popular than MNRO. Our overall hedge fund sentiment score for JRVR is 37. 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. Hedge funds dodged a bullet by taking a bearish stance towards JRVR. 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 percentage points. These stocks gained 32.9% in 2020 through December 8th but managed to beat the market again by 16.2 percentage points. Unfortunately JRVR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); JRVR investors were disappointed as the stock returned 2% since the end of the third quarter (through 12/8) 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 2020.

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

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