Do Hedge Funds Love Jianpu Technology Inc. (JT)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Jianpu Technology Inc. (NYSE:JT) based on that data.

Hedge fund interest in Jianpu Technology Inc. (NYSE:JT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that JT 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Prudential Bancorp, Inc. (NASDAQ:PBIP), ClearPoint Neuro Inc. (NASDAQ:CLPT), and Concord Medical Services Hldg Ltd (NYSE:CCM) to gather more data points.

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.

Ken Griffin of Citadel Investment Group

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. Now let’s take a look at the new hedge fund action surrounding Jianpu Technology Inc. (NYSE:JT).

Hedge fund activity in Jianpu Technology Inc. (NYSE:JT)

At third quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards JT over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Yiheng Capital, managed by Jonathan Guo, holds the largest position in Jianpu Technology Inc. (NYSE:JT). Yiheng Capital has a $1 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, holding a $0.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish contain Ken Griffin’s Citadel Investment Group, Mark Wolfson and Jamie Alexander’s Jasper Ridge Partners and . In terms of the portfolio weights assigned to each position Yiheng Capital allocated the biggest weight to Jianpu Technology Inc. (NYSE:JT), around 0.06% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.0009 percent of its 13F equity portfolio to JT.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now review hedge fund activity in other stocks similar to Jianpu Technology Inc. (NYSE:JT). We will take a look at Prudential Bancorp, Inc. (NASDAQ:PBIP), ClearPoint Neuro Inc. (NASDAQ:CLPT), Concord Medical Services Hldg Ltd (NYSE:CCM), Perma-Fix Environmental Services, Inc. (NASDAQ:PESI), eMagin Corporation (NYSE:EMAN), Research Frontiers, Inc. (NASDAQ:REFR), and AIM ImmunoTech Inc. (NYSE:AIM). This group of stocks’ market caps are closest to JT’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.1 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $2 million in JT’s case. eMagin Corporation (NYSE:EMAN) is the most popular stock in this table. On the other hand Concord Medical Services Hldg Ltd (NYSE:CCM) is the least popular one with only 1 bullish hedge fund positions. Jianpu Technology Inc. (NYSE:JT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JT is 72.1. 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 positive signal but 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 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 beat the market again by 16.1 percentage points. Unfortunately JT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on JT were disappointed as the stock returned -27.9% since the end of September (through 11/27) 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 many of these stocks already outperformed the market so far this year.

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