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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards JAKKS Pacific, Inc. (NASDAQ:JAKK).
JAKKS Pacific, Inc. (NASDAQ:JAKK) investors should be aware of a decrease in enthusiasm from smart money in recent months. JAKKS Pacific, Inc. (NASDAQ:JAKK) was in 3 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 16. Our calculations also showed that JAKK 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.
If you'd ask most shareholders, hedge funds are perceived as worthless, outdated investment tools of the past. While there are more than 8000 funds trading at the moment, Our researchers choose to focus on the crème de la crème of this club, around 850 funds. It is estimated that this group of investors shepherd bulk of the smart money's total capital, and by tracking their inimitable picks, Insider Monkey has unearthed a few investment strategies that have historically outrun the market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Andrew Axelrod of Axar Capital
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 10 most profitable companies in the world 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. Keeping this in mind we're going to analyze the key hedge fund action surrounding JAKKS Pacific, Inc. (NASDAQ:JAKK).
What does smart money think about JAKKS Pacific, Inc. (NASDAQ:JAKK)?
At third quarter's end, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -40% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in JAKK a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Axar Capital held the most valuable stake in JAKKS Pacific, Inc. (NASDAQ:JAKK), which was worth $0.4 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $0.4 million worth of shares. Citadel Investment Group was 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 Axar Capital allocated the biggest weight to JAKKS Pacific, Inc. (NASDAQ:JAKK), around 0.6% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0004 percent of its 13F equity portfolio to JAKK.
Due to the fact that JAKKS Pacific, Inc. (NASDAQ:JAKK) has faced a decline in interest from the entirety of the hedge funds we track, it's easy to see that there was a specific group of hedge funds that slashed their full holdings by the end of the third quarter. At the top of the heap, Seth Fischer's Oasis Management sold off the largest investment of all the hedgies followed by Insider Monkey, valued at an estimated $0.7 million in stock, and Paul Tudor Jones's Tudor Investment Corp was right behind this move, as the fund sold off about $0 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as JAKKS Pacific, Inc. (NASDAQ:JAKK) but similarly valued. We will take a look at Sundance Energy Inc. (NASDAQ:SNDE), China Green Agriculture, Inc (NYSE:CGA), China Pharma Holdings, Inc. (NYSE:CPHI), Koss Corporation (NASDAQ:KOSS), Bio-Path Holdings, Inc. (NASDAQ:BPTH), SG Blocks, Inc. (NASDAQ:SGBX), and Camber Energy, Inc. (NYSE:CEI). All of these stocks' market caps are similar to JAKK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SNDE,1,36,0 CGA,1,71,0 CPHI,2,302,1 KOSS,2,568,0 BPTH,1,259,-1 SGBX,2,43,1 CEI,1,129,0 Average,1.4,201,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 1.4 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $1 million in JAKK's case. China Pharma Holdings, Inc. (NYSE:CPHI) is the most popular stock in this table. On the other hand Sundance Energy Inc. (NASDAQ:SNDE) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks JAKKS Pacific, Inc. (NASDAQ:JAKK) is more popular among hedge funds. Our overall hedge fund sentiment score for JAKK is 58.6. 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 returned 28.1% in 2020 through November 23rd but still managed to beat the market by 15.4 percentage points. Hedge funds were also right about betting on JAKK as the stock returned 39.2% since the end of September (through 11/23) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.