We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of The J.M. Smucker Company (NYSE:SJM) based on that data.
Is The J.M. Smucker Company (NYSE:SJM) the right investment to pursue these days? Hedge funds are taking a bullish view. The number of bullish hedge fund bets increased by 3 recently. Our calculations also showed that SJM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). SJM was in 31 hedge funds’ portfolios at the end of December. There were 28 hedge funds in our database with SJM holdings at the end of the previous quarter.
To the average investor there are many indicators stock traders use to analyze stocks. Some of the most under-the-radar indicators are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the elite investment managers can outperform the broader indices by a healthy amount (see the details here).
Alexander Roepers of Atlantic Investment Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a glance at the fresh hedge fund action surrounding The J.M. Smucker Company (NYSE:SJM).
How are hedge funds trading The J.M. Smucker Company (NYSE:SJM)?
At the end of the fourth quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in SJM a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in The J.M. Smucker Company (NYSE:SJM) was held by Ariel Investments, which reported holding $157.4 million worth of stock at the end of September. It was followed by AQR Capital Management with a $75.1 million position. Other investors bullish on the company included Polaris Capital Management, D E Shaw, and GLG Partners. In terms of the portfolio weights assigned to each position Ariel Investments allocated the biggest weight to The J.M. Smucker Company (NYSE:SJM), around 1.97% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, dishing out 1.79 percent of its 13F equity portfolio to SJM.
Now, key hedge funds were breaking ground themselves. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), assembled the biggest position in The J.M. Smucker Company (NYSE:SJM). Schonfeld Strategic Advisors had $1.8 million invested in the company at the end of the quarter. Alexander Roepers’s Atlantic Investment Management also initiated a $1.1 million position during the quarter. The other funds with brand new SJM positions are Michael Gelband’s ExodusPoint Capital, Ran Pang’s Quantamental Technologies, and Matthew Tewksbury’s Stevens Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The J.M. Smucker Company (NYSE:SJM) but similarly valued. We will take a look at ASE Technology Holding Co., Ltd. (NYSE:ASX), Huazhu Group Limited (NASDAQ:HTHT), VICI Properties Inc. (NYSE:VICI), and LINE Corporation (NYSE:LN). This group of stocks’ market values resemble SJM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASX | 10 | 231824 | 2 |
| HTHT | 18 | 258810 | 2 |
| VICI | 37 | 1826674 | -3 |
| LN | 13 | 96390 | 5 |
| Average | 19.5 | 603425 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $603 million. That figure was $450 million in SJM’s case. VICI Properties Inc. (NYSE:VICI) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 10 bullish hedge fund positions. The J.M. Smucker Company (NYSE:SJM) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but still beat the market by 3.2 percentage points. Hedge funds were also right about betting on SJM as the stock returned 4.4% during the first quarter (through March 16th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
