Hedge Funds Are Buying Jefferies Financial Group Inc. (JEF)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Jefferies Financial Group Inc. (NYSE:JEF).

Is Jefferies Financial Group Inc. (NYSE:JEF) a buy here? The best stock pickers were getting more optimistic. The number of bullish hedge fund bets increased by 5 lately. Jefferies Financial Group Inc. (NYSE:JEF) was in 38 hedge funds’ portfolios at the end of March. The all time high for this statistic is 39. Our calculations also showed that JEF isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Christian Leone of Luxor Capital Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s review the fresh hedge fund action surrounding Jefferies Financial Group Inc. (NYSE:JEF).

Do Hedge Funds Think JEF Is A Good Stock To Buy Now?

At Q1’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in JEF over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, First Pacific Advisors LLC was the largest shareholder of Jefferies Financial Group Inc. (NYSE:JEF), with a stake worth $214.7 million reported as of the end of March. Trailing First Pacific Advisors LLC was Luxor Capital Group, which amassed a stake valued at $105.4 million. Arrowstreet Capital, Renaissance Technologies, and Moerus Capital Management 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 Moerus Capital Management allocated the biggest weight to Jefferies Financial Group Inc. (NYSE:JEF), around 15.78% of its 13F portfolio. Pacifica Capital Investments is also relatively very bullish on the stock, dishing out 8.41 percent of its 13F equity portfolio to JEF.

Consequently, specific money managers were breaking ground themselves. Luxor Capital Group, managed by Christian Leone, initiated the most valuable call position in Jefferies Financial Group Inc. (NYSE:JEF). Luxor Capital Group had $105.4 million invested in the company at the end of the quarter. Christian Leone’s Luxor Capital Group also initiated a $17 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Peter Seuss’s Prana Capital Management, and Israel Englander’s Millennium Management.

Let’s also examine hedge fund activity in other stocks similar to Jefferies Financial Group Inc. (NYSE:JEF). These stocks are PVH Corp (NYSE:PVH), InVitae Corporation (NYSE:NVTA), Cabot Oil & Gas Corporation (NYSE:COG), JOYY Inc. (NASDAQ:YY), Manhattan Associates, Inc. (NASDAQ:MANH), Thor Industries, Inc. (NYSE:THO), and United Therapeutics Corporation (NASDAQ:UTHR). This group of stocks’ market values are similar to JEF’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $1007 million. That figure was $701 million in JEF’s case. United Therapeutics Corporation (NASDAQ:UTHR) is the most popular stock in this table. On the other hand Cabot Oil & Gas Corporation (NYSE:COG) is the least popular one with only 20 bullish hedge fund positions. Jefferies Financial Group Inc. (NYSE:JEF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JEF is 80.1. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Hedge funds were also right about betting on JEF, though not to the same extent, as the stock returned 7.8% since Q1 (through June 25th) and outperformed the market as well.

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