Hedge Funds Are Crazy About South Jersey Industries Inc (SJI)

Hedge funds are not perfect. They have their bad picks just like everyone else. Micron, a stock hedge funds have loved, lost 50% during the last 12 months ending in October 30. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% in the same time period, vs. a gain of 5.2% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of South Jersey Industries Inc (NYSE:SJI).

South Jersey Industries Inc (NYSE:SJI) has seen an increase in support from the world’s most elite money managers recently. SJI was in 10 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with SJI positions at the end of the previous quarter. 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 First Busey Corporation (NASDAQ:BUSE), Halozyme Therapeutics, Inc. (NASDAQ:HALO), and Sanmina Corp (NASDAQ:SANM) to gather more data points.

If you’d ask most market participants, hedge funds are assumed to be slow, old financial vehicles of years past. While there are more than an 8000 funds in operation at present, Our researchers choose to focus on the top tier of this club, around 700 funds. These investment experts orchestrate most of all hedge funds’ total asset base, and by following their inimitable equity investments, Insider Monkey has determined a few investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Now, let’s analyze the key action surrounding South Jersey Industries Inc (NYSE:SJI).

How have hedgies been trading South Jersey Industries Inc (NYSE:SJI)?

At the Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the second quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the largest position in South Jersey Industries Inc (NYSE:SJI). Adage Capital Management has a $23.9 million position in the stock, comprising 0.1% of its 13F portfolio. On Adage Capital Management’s heels is Renaissance Technologies, which holds a $8.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish encompass Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Ken Gray and Steve Walsh’s Bryn Mawr Capital.

Now, specific money managers were leading the bulls’ herd. Highbridge Capital Management, managed by Glenn Russell Dubin, created the largest position in South Jersey Industries Inc (NYSE:SJI). Highbridge Capital Management had $2.2 million invested in the company at the end of the quarter. Thomas M. Fitzgerald’s Longbow Capital Partners also initiated a $1.2 million position during the quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as South Jersey Industries Inc (NYSE:SJI) but similarly valued. These stocks are First Busey Corporation (NASDAQ:BUSE), Halozyme Therapeutics, Inc. (NASDAQ:HALO), Sanmina Corp (NASDAQ:SANM), and USANA Health Sciences, Inc. (NYSE:USNA). This group of stocks’ market valuations are similar to SJI’s market valuation.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $143 million. That figure was $56 million in SJI’s case. Halozyme Therapeutics, Inc. (NASDAQ:HALO) is the most popular stock in this table, while First Busey Corporation (NASDAQ:BUSE) is the least popular one with only 8 funds reporting long positions. South Jersey Industries Inc (NYSE:SJI) 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 HALO might be a better candidate to consider a long position.