Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying for a while now that the current market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the fourth quarter, many investors lost money due to unpredictable events such as the sudden increase in long-term interest rates and unintended consequences of the trade war with China. Nevertheless, many of the stocks that tanked in the third quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Johnson Outdoors Inc. (NASDAQ:JOUT) changed recently.
Is Johnson Outdoors Inc. (NASDAQ:JOUT) the right investment to pursue these days? The best stock pickers are taking an optimistic view. The number of bullish hedge fund bets improved by 3 recently. Our calculations also showed that jout isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
We’re going to take a gander at the key hedge fund action surrounding Johnson Outdoors Inc. (NASDAQ:JOUT).
How are hedge funds trading Johnson Outdoors Inc. (NASDAQ:JOUT)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in JOUT heading into this year. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jim Simons’s Renaissance Technologies has the largest position in Johnson Outdoors Inc. (NASDAQ:JOUT), worth close to $34.9 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which holds a $8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions include Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Paul Marshall and Ian Wace’s Marshall Wace LLP.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most valuable position in Johnson Outdoors Inc. (NASDAQ:JOUT). Marshall Wace LLP had $2.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.8 million position during the quarter. The following funds were also among the new JOUT investors: Joel Greenblatt’s Gotham Asset Management and Roger Ibbotson’s Zebra Capital Management.
Let’s also examine 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 Acorda Therapeutics Inc (NASDAQ:ACOR), Denny’s Corporation (NASDAQ:DENN), Kelly Services, Inc. (NASDAQ:KELYA), and InfraREIT Inc (NYSE:HIFR). This group of stocks’ market values match JOUT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ACOR | 21 | 225763 | 0 |
| DENN | 22 | 144891 | 4 |
| KELYA | 7 | 7527 | -4 |
| HIFR | 14 | 112590 | -2 |
| Average | 16 | 122693 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $123 million. That figure was $57 million in JOUT’s case. Denny’s Corporation (NASDAQ:DENN) is the most popular stock in this table. On the other hand Kelly Services, Inc. (NASDAQ:KELYA) is the least popular one with only 7 bullish hedge fund positions. Johnson Outdoors Inc. (NASDAQ:JOUT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard DENN might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
