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 Ackman’s recent Valeant losses). However, it is still 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 J.C. Penney Company, Inc. (NYSE:JCP).
Is J.C. Penney Company, Inc. (NYSE:JCP) a healthy stock for your portfolio? Money managers are taking a bullish view. The number of bullish hedge fund bets increased by 4 in recent months. JCP was in 35 hedge funds’ portfolios at the end of the third quarter of 2015. There were 31 hedge funds in our database with JCP holdings at the end of the previous quarter. At the end of this article we will also compare JCP to other stocks including Lithia Motors Inc (NYSE:LAD), BWX Technologies Inc (NYSE:BWXT), and Jack in the Box Inc. (NASDAQ:JACK) to get a better sense of its popularity.
Follow J C Penney Co Inc (NYSE:JCP)
Follow J C Penney Co Inc (NYSE:JCP)
Now, let’s review the latest action surrounding J.C. Penney Company, Inc. (NYSE:JCP).
How are hedge funds trading J.C. Penney Company, Inc. (NYSE:JCP)?
At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in J.C. Penney Company, Inc. (NYSE:JCP). Renaissance Technologies has an $136.3 million position in the stock, comprising 0.3% of its 13F portfolio. On Renaissance Technologies’s heels is Scopus Asset Management, led by Alexander Mitchell, holding an $54.6 million position; 1.5% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions contain Peter Muller’s PDT Partners, Dmitry Balyasny’s Balyasny Asset Management and Ken Griffin’s Citadel Investment Group.
With a general bullishness amongst the heavyweights, specific money managers have jumped into J.C. Penney Company, Inc. (NYSE:JCP) headfirst. PDT Partners, managed by Peter Muller, created the biggest position in J.C. Penney Company, Inc. (NYSE:JCP). PDT Partners had $33.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated an $19.7 million position during the quarter. The following funds were also among the new JCP investors: Leon Cooperman’s Omega Advisors, Robert Raiff’s Raiff Partners, and Jody LaNasa and Vivian Lau’s Serengeti Asset Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as J.C. Penney Company, Inc. (NYSE:JCP) but similarly valued. These stocks are Lithia Motors Inc (NYSE:LAD), BWX Technologies Inc (NYSE:BWXT), Jack in the Box Inc. (NASDAQ:JACK), and Aspen Insurance Holdings Limited (NYSE:AHL). This group of stocks’ market valuations are similar to JCP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LAD | 23 | 293597 | 2 |
| BWXT | 26 | 506212 | 12 |
| JACK | 27 | 163296 | -4 |
| AHL | 22 | 201309 | 2 |
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $291 million. That figure was $424 million in JCP’s case. Jack in the Box Inc. (NASDAQ:JACK) is the most popular stock in this table. On the other hand Aspen Insurance Holdings Limited (NYSE:AHL) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks J.C. Penney Company, Inc. (NYSE:JCP) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
