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Were Hedge Funds Right About Jumia Technologies AG (JMIA)?

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In this article we will take a look at whether hedge funds think Jumia Technologies AG (NYSE:JMIA) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is Jumia Technologies AG (NYSE:JMIA) going to take off soon? Prominent investors were in an optimistic mood. The number of bullish hedge fund positions moved up by 3 recently. Jumia Technologies AG (NYSE:JMIA) was in 16 hedge funds' portfolios at the end of March. The all time high for this statistic was previously 13. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that JMIA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 13 hedge funds in our database with JMIA holdings at the end of December.

In today’s marketplace there are a lot of signals shareholders can use to size up stocks. Two of the most useful signals are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite investment managers can outclass their index-focused peers by a healthy margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Frank Brosens Taconic Capital
Frank Brosens Taconic Capital

Frank Brosens of Taconic Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Keeping this in mind we're going to take a peek at the latest hedge fund action surrounding Jumia Technologies AG (NYSE:JMIA).

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

At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in JMIA a year ago. With hedgies' sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

Is JMIA A Good Stock To Buy?
Is JMIA A Good Stock To Buy?

Among these funds, Renaissance Technologies held the most valuable stake in Jumia Technologies AG (NYSE:JMIA), which was worth $37.5 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $36.2 million worth of shares. D E Shaw, Citadel Investment Group, and Kerrisdale 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 Infini Capital allocated the biggest weight to Jumia Technologies AG (NYSE:JMIA), around 1.83% of its 13F portfolio. Proem Advisors is also relatively very bullish on the stock, earmarking 1.32 percent of its 13F equity portfolio to JMIA.

With a general bullishness amongst the heavyweights, specific money managers have jumped into Jumia Technologies AG (NYSE:JMIA) headfirst. Taconic Capital, managed by Frank Brosens, established the largest position in Jumia Technologies AG (NYSE:JMIA). Taconic Capital had $5.3 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also made a $2.5 million investment in the stock during the quarter. The other funds with brand new JMIA positions are Donald Sussman's Paloma Partners, Paul Tudor Jones's Tudor Investment Corp, and Tony Chin's Infini Capital.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Jumia Technologies AG (NYSE:JMIA) but similarly valued. We will take a look at Sendas Distribuidora S.A. (NYSE:ASAI), Celsius Holdings, Inc. (NASDAQ:CELH), I-Mab (NASDAQ:IMAB), 8x8, Inc. (NASDAQ:EGHT), Vishay Intertechnology (NYSE:VSH), EPR Properties (NYSE:EPR), and Sanderson Farms, Inc. (NASDAQ:SAFM). All of these stocks' market caps resemble JMIA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ASAI,6,11657,6 CELH,15,116405,-4 IMAB,20,509159,6 EGHT,24,1006511,-2 VSH,32,565142,1 EPR,15,345162,0 SAFM,18,177554,-1 Average,18.6,390227,0.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.6 hedge funds with bullish positions and the average amount invested in these stocks was $390 million. That figure was $124 million in JMIA's case. Vishay Intertechnology (NYSE:VSH) is the most popular stock in this table. On the other hand Sendas Distribuidora S.A. (NYSE:ASAI) is the least popular one with only 6 bullish hedge fund positions. Jumia Technologies AG (NYSE:JMIA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for JMIA is 57.2. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately JMIA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); JMIA investors were disappointed as the stock returned -37.7% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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