You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund managers like Jeff Ubben, George Soros and Seth Klarman hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Is Juniper Networks, Inc. (NYSE:JNPR) undervalued? The smart money is selling. The number of long hedge fund positions dropped by 5 recently. Our calculations also showed that jnpr isn't among the 30 most popular stocks among hedge funds. JNPR was in 24 hedge funds' portfolios at the end of March. There were 29 hedge funds in our database with JNPR positions at the end of the previous quarter.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a peek at the recent hedge fund action encompassing Juniper Networks, Inc. (NYSE:JNPR).
What have hedge funds been doing with Juniper Networks, Inc. (NYSE:JNPR)?
Heading into the second quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in JNPR a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Juniper Networks, Inc. (NYSE:JNPR), with a stake worth $160.3 million reported as of the end of March. Trailing AQR Capital Management was Two Sigma Advisors, which amassed a stake valued at $101.8 million. D E Shaw, Renaissance Technologies, and Pzena Investment Management were also very fond of the stock, giving the stock large weights in their portfolios.
Because Juniper Networks, Inc. (NYSE:JNPR) has faced a decline in interest from the entirety of the hedge funds we track, it's easy to see that there exists a select few funds that decided to sell off their entire stakes by the end of the third quarter. It's worth mentioning that John A. Levin's Levin Capital Strategies said goodbye to the biggest stake of all the hedgies tracked by Insider Monkey, valued at close to $1.6 million in stock. Nick Thakore's fund, Diametric Capital, also cut its stock, about $1.4 million worth. These moves are interesting, as aggregate hedge fund interest fell by 5 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks similar to Juniper Networks, Inc. (NYSE:JNPR). These stocks are Leidos Holdings Inc (NYSE:LDOS), Qiagen NV (NYSE:QGEN), Aurora Cannabis Inc. (NYSE:ACB), and EPAM Systems Inc (NYSE:EPAM). This group of stocks' market caps are similar to JNPR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LDOS,21,326471,-5 QGEN,23,375552,2 ACB,11,115927,2 EPAM,21,72308,-1 Average,19,222565,-0.5 [/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 $223 million. That figure was $731 million in JNPR's case. Qiagen NV (NYSE:QGEN) is the most popular stock in this table. On the other hand Aurora Cannabis Inc. (NYSE:ACB) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Juniper Networks, Inc. (NYSE:JNPR) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 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 -4.6% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.