The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Johnson Outdoors Inc. (NASDAQ:JOUT) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is Johnson Outdoors Inc. (NASDAQ:JOUT) going to take off soon? Prominent investors are in an optimistic mood. The number of long hedge fund positions improved by 2 recently. Our calculations also showed that JOUT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
Chuck Royce of Royce & Associates
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let’s take a look at the recent hedge fund action surrounding Johnson Outdoors Inc. (NASDAQ:JOUT).
What does smart money think about Johnson Outdoors Inc. (NASDAQ:JOUT)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in JOUT a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Johnson Outdoors Inc. (NASDAQ:JOUT), with a stake worth $21.6 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $21.1 million. Millennium Management, AQR Capital Management, and Citadel Investment Group 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 Zebra Capital Management allocated the biggest weight to Johnson Outdoors Inc. (NASDAQ:JOUT), around 0.32% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.2 percent of its 13F equity portfolio to JOUT.
As industrywide interest jumped, specific money managers were breaking ground themselves. Marshall Wace, managed by Paul Marshall and Ian Wace, initiated the largest position in Johnson Outdoors Inc. (NASDAQ:JOUT). Marshall Wace had $0.5 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $0.5 million investment in the stock during the quarter. The only other fund with a brand new JOUT position is David Harding’s Winton Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Johnson Outdoors Inc. (NASDAQ:JOUT) but similarly valued. We will take a look at Mercantile Bank Corp. (NASDAQ:MBWM), Crossamerica Partners LP (NYSE:CAPL), Global Cord Blood Corp (NYSE:CO), and Bridge Bancorp, Inc. (NASDAQ:BDGE). All of these stocks’ market caps resemble JOUT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MBWM | 8 | 31156 | 1 |
| CAPL | 1 | 4401 | 0 |
| CO | 11 | 29108 | 2 |
| BDGE | 10 | 95163 | 0 |
| Average | 7.5 | 39957 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $61 million in JOUT’s case. Global Cord Blood Corp (NYSE:CO) is the most popular stock in this table. On the other hand Crossamerica Partners LP (NYSE:CAPL) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Johnson Outdoors Inc. (NASDAQ:JOUT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on JOUT as the stock returned 10.6% during the first two months of Q4 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.
Disclosure: None. This article was originally published at Insider Monkey.
