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We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Melvin Capital's recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards The St. Joe Company (NYSE:JOE).
The St. Joe Company (NYSE:JOE) investors should pay attention to an increase in hedge fund sentiment in recent months. The St. Joe Company (NYSE:JOE) was in 17 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 15. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 12 hedge funds in our database with JOE positions at the end of the fourth quarter. Our calculations also showed that JOE isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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 let's take a peek at the fresh hedge fund action regarding The St. Joe Company (NYSE:JOE).
Do Hedge Funds Think JOE Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 42% from the fourth quarter of 2020. By comparison, 11 hedge funds held shares or bullish call options in JOE a year ago. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Fairholme (FAIRX), managed by Bruce Berkowitz, holds the number one position in The St. Joe Company (NYSE:JOE). Fairholme (FAIRX) has a $1.1045 billion position in the stock, comprising 91.2% of its 13F portfolio. On Fairholme (FAIRX)'s heels is Mario Gabelli of GAMCO Investors, with a $45.1 million position; 0.4% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions contain Michael A. Price and Amos Meron's Empyrean Capital Partners, Chuck Royce's Royce & Associates and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Fairholme (FAIRX) allocated the biggest weight to The St. Joe Company (NYSE:JOE), around 91.16% of its 13F portfolio. Plaisance Capital is also relatively very bullish on the stock, designating 1.88 percent of its 13F equity portfolio to JOE.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Horizon Asset Management, managed by Murray Stahl, established the most valuable position in The St. Joe Company (NYSE:JOE). Horizon Asset Management had $2.4 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also made a $2 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Muller's PDT Partners, Renaissance Technologies, and Michael Gelband's ExodusPoint Capital.
Let's also examine hedge fund activity in other stocks similar to The St. Joe Company (NYSE:JOE). These stocks are Callaway Golf Company (NYSE:ELY), UP Fintech Holding Limited (NASDAQ:TIGR), First Midwest Bancorp Inc (NASDAQ:FMBI), Barnes Group Inc. (NYSE:B), Jack in the Box Inc. (NASDAQ:JACK), Accolade, Inc. (NASDAQ:ACCD), and Xencor Inc (NASDAQ:XNCR). All of these stocks' market caps are similar to JOE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ELY,40,504141,0 TIGR,14,103231,6 FMBI,13,114585,-3 B,18,42924,6 JACK,30,302872,-4 ACCD,19,471681,-2 XNCR,16,269589,0 Average,21.4,258432,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.4 hedge funds with bullish positions and the average amount invested in these stocks was $258 million. That figure was $1178 million in JOE's case. Callaway Golf Company (NYSE:ELY) is the most popular stock in this table. On the other hand First Midwest Bancorp Inc (NASDAQ:FMBI) is the least popular one with only 13 bullish hedge fund positions. The St. Joe Company (NYSE:JOE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for JOE is 47.4. 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 JOE wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); JOE investors were disappointed as the stock returned 3.3% 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.