Hedge Funds Are Selling Jacobs Engineering Group Inc (JEC)

Is Jacobs Engineering Group Inc (NYSE:JEC) an attractive investment today? Hedge funds are getting less optimistic. The number of long hedge fund bets decreased by 5 lately.

According to most market participants, hedge funds are perceived as slow, outdated investment tools of years past. While there are greater than 8000 funds in operation at present, we at Insider Monkey look at the masters of this club, about 450 funds. It is estimated that this group controls the lion’s share of all hedge funds’ total capital, and by monitoring their best equity investments, we have revealed a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as integral, positive insider trading sentiment is a second way to parse down the world of equities. Obviously, there are plenty of motivations for a corporate insider to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this tactic if shareholders know what to do (learn more here).

Keeping this in mind, let’s take a peek at the latest action surrounding Jacobs Engineering Group Inc (NYSE:JEC).

What have hedge funds been doing with Jacobs Engineering Group Inc (NYSE:JEC)?

Heading into Q2, a total of 16 of the hedge funds we track were long in this stock, a change of -24% from the first quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably.

Of the funds we track, Kerr Neilson’s Platinum Asset Management had the most valuable position in Jacobs Engineering Group Inc (NYSE:JEC), worth close to $225.9 million, accounting for 4.9% of its total 13F portfolio. On Platinum Asset Management’s heels is Chuck Royce of Royce & Associates, with a $73.7 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Christopher Medlock James’s Partner Fund Management, William Harnisch’s Peconic Partners LLC and Phill Gross and Robert Atchinson’s Adage Capital Management.

Since Jacobs Engineering Group Inc (NYSE:JEC) has faced falling interest from hedge fund managers, we can see that there were a few money managers that decided to sell off their positions entirely at the end of the first quarter. At the top of the heap, Jim Simons’s Renaissance Technologies dropped the largest position of all the hedgies we key on, worth an estimated $11.8 million in stock., and Israel Englander of Millennium Management was right behind this move, as the fund cut about $8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 5 funds at the end of the first quarter.

What do corporate executives and insiders think about Jacobs Engineering Group Inc (NYSE:JEC)?

Insider trading activity, especially when it’s bullish, is best served when the company in focus has experienced transactions within the past six months. Over the latest 180-day time frame, Jacobs Engineering Group Inc (NYSE:JEC) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Jacobs Engineering Group Inc (NYSE:JEC). These stocks are AECOM Technology Corp (NYSE:ACM), URS Corp (NYSE:URS), SAIC, Inc. (NYSE:SAI), and KBR, Inc. (NYSE:KBR). This group of stocks are the members of the technical services industry and their market caps resemble JEC’s market cap.

With the returns shown by the aforementioned time-tested strategies, retail investors should always pay attention to hedge fund and insider trading sentiment, and Jacobs Engineering Group Inc (NYSE:JEC) shareholders fit into this picture quite nicely.

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