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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on China Jo Jo Drugstores Inc (NASDAQ:CJJD).
China Jo Jo Drugstores Inc (NASDAQ:CJJD) was in 6 hedge funds' portfolios at the end of September. The all time high for this statistics is 5. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. CJJD has experienced an increase in hedge fund interest of late. There were 5 hedge funds in our database with CJJD positions at the end of the second quarter. Our calculations also showed that CJJD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Lei Zhang of Hillhouse Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let's take a gander at the new hedge fund action encompassing China Jo Jo Drugstores Inc (NASDAQ:CJJD).
How have hedgies been trading China Jo Jo Drugstores Inc (NASDAQ:CJJD)?
Heading into the fourth quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in CJJD a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Hillhouse Capital Management was the largest shareholder of China Jo Jo Drugstores Inc (NASDAQ:CJJD), with a stake worth $4.7 million reported as of the end of September. Trailing Hillhouse Capital Management was Renaissance Technologies, which amassed a stake valued at $1.2 million. Citadel Investment Group, Sabby Capital, and Two Sigma Advisors 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 Hillhouse Capital Management allocated the biggest weight to China Jo Jo Drugstores Inc (NASDAQ:CJJD), around 0.04% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to CJJD.
As aggregate interest increased, key money managers have been driving this bullishness. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the most outsized position in China Jo Jo Drugstores Inc (NASDAQ:CJJD). Two Sigma Advisors had $0 million invested in the company at the end of the quarter.
Let's now review hedge fund activity in other stocks similar to China Jo Jo Drugstores Inc (NASDAQ:CJJD). We will take a look at Nuverra Environmental Solutions Inc (NYSE:NES), Summer Infant, Inc. (NASDAQ:SUMR), BK Technologies Corp. (NYSE:BKTI), AMCON Distributing Co. (NYSE:DIT), Great Elm Capital Corp. (NASDAQ:GECC), Beasley Broadcast Group Inc (NASDAQ:BBGI), and Polar Power, Inc. (NASDAQ:POLA). All of these stocks' market caps are closest to CJJD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NES,3,16672,0 SUMR,3,16013,0 BKTI,1,1959,0 DIT,1,705,0 GECC,5,654,1 BBGI,2,1495,0 POLA,2,1344,-1 Average,2.4,5549,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.4 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $6 million in CJJD's case. Great Elm Capital Corp. (NASDAQ:GECC) is the most popular stock in this table. On the other hand BK Technologies Corp. (NYSE:BKTI) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks China Jo Jo Drugstores Inc (NASDAQ:CJJD) is more popular among hedge funds. Our overall hedge fund sentiment score for CJJD is 86. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still managed to beat the market by 16.1 percentage points. Hedge funds were also right about betting on CJJD, though not to the same extent, as the stock returned 9.3% since the end of September (through November 27th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.