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Is Jupai Holdings Limited (JP) Going to Burn These Hedge Funds?

Debasis Saha

Is Jupai Holdings Limited (NYSE:JP) a good stock to buy 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.

Jupai Holdings Limited (NYSE:JP) was in 4 hedge funds' portfolios at the end of September. JP investors should pay attention to an increase in hedge fund sentiment lately. There were 1 hedge funds in our database with JP holdings at the end of the previous quarter. Our calculations also showed that JP isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the 21st century investor’s toolkit there are numerous gauges shareholders can use to value stocks. Two of the most under-the-radar gauges are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outpace the S&P 500 by a significant margin (see the details here).

[caption id="attachment_26073" align="alignnone" width="600"] Jim Simons of Renaissance Technologies[/caption]

RENAISSANCE TECHNOLOGIES

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Keeping this in mind we're going to review the fresh hedge fund action encompassing Jupai Holdings Limited (NYSE:JP).

What does smart money think about Jupai Holdings Limited (NYSE:JP)?

At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 300% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards JP over the last 17 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is JP A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the biggest position in Jupai Holdings Limited (NYSE:JP), worth close to $0.2 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism encompass Israel Englander's Millennium Management, Ken Griffin's Citadel Investment Group and . In terms of the portfolio weights assigned to each position Arrowstreet Capital allocated the biggest weight to Jupai Holdings Limited (NYSE:JP), around 0.0002% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0001 percent of its 13F equity portfolio to JP.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls' herd. Renaissance Technologies, initiated the largest position in Jupai Holdings Limited (NYSE:JP). Renaissance Technologies had $0.2 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also made a $0 million investment in the stock during the quarter. The only other fund with a new position in the stock is Ken Griffin's Citadel Investment Group.

Let's go over hedge fund activity in other stocks similar to Jupai Holdings Limited (NYSE:JP). These stocks are S&W Seed Company (NASDAQ:SANW), Houston Wire & Cable Company (NASDAQ:HWCC), NantHealth, Inc. (NASDAQ:NH), and Entasis Therapeutics Holdings Inc. (NASDAQ:ETTX). This group of stocks' market valuations match JP's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SANW,7,49807,0 HWCC,7,17580,2 NH,7,699,2 ETTX,2,8151,0 Average,5.75,19059,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $0 million in JP's case. S&W Seed Company (NASDAQ:SANW) is the most popular stock in this table. On the other hand Entasis Therapeutics Holdings Inc. (NASDAQ:ETTX) is the least popular one with only 2 bullish hedge fund positions. Jupai Holdings Limited (NYSE:JP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately JP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); JP investors were disappointed as the stock returned -22.2% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.

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

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