World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Juniper Networks, Inc. (NYSE:JNPR) has experienced an increase in enthusiasm from smart money in recent months. JNPR was in 28 hedge funds' portfolios at the end of June. There were 24 hedge funds in our database with JNPR positions at the end of the previous quarter. Our calculations also showed that JNPR isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to 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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, 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 peek at the latest hedge fund action encompassing Juniper Networks, Inc. (NYSE:JNPR).
What have hedge funds been doing with Juniper Networks, Inc. (NYSE:JNPR)?
Heading into the third quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from one quarter earlier. By comparison, 27 hedge funds held shares or bullish call options in JNPR a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, AQR Capital Management, managed by Cliff Asness, holds the number one position in Juniper Networks, Inc. (NYSE:JNPR). AQR Capital Management has a $132 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $86.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain D. E. Shaw's D E Shaw, John Overdeck and David Siegel's Two Sigma Advisors and Richard S. Pzena's Pzena Investment Management.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the largest position in Juniper Networks, Inc. (NYSE:JNPR). Balyasny Asset Management had $32 million invested in the company at the end of the quarter. Brandon Haley's Holocene Advisors also initiated a $10.7 million position during the quarter. The other funds with brand new JNPR positions are Sander Gerber's Hudson Bay Capital Management, Anand Parekh's Alyeska Investment Group, and Michael Kharitonov and Jon David McAuliffe's Voleon Capital.
Let's now review hedge fund activity in other stocks similar to Juniper Networks, Inc. (NYSE:JNPR). We will take a look at Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), Micro Focus Intl PLC (NYSE:MFGP), VICI Properties Inc. (NYSE:VICI), and Qiagen NV (NYSE:QGEN). This group of stocks' market values are closest to JNPR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IONS,18,374673,-4 MFGP,6,44588,2 VICI,59,2841028,22 QGEN,25,303029,2 Average,27,890830,5.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $891 million. That figure was $700 million in JNPR's case. VICI Properties Inc. (NYSE:VICI) is the most popular stock in this table. On the other hand Micro Focus Intl PLC (NYSE:MFGP) is the least popular one with only 6 bullish hedge fund positions. Juniper Networks, Inc. (NYSE:JNPR) 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 JNPR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on JNPR were disappointed as the stock returned -6.3% 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.