Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Janus International Group Inc (NYSE:JBI).
Janus International Group Inc (NYSE:JBI) shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. Janus International Group Inc (NYSE:JBI) was in 23 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 27. There were 27 hedge funds in our database with JBI holdings at the end of March. Our calculations also showed that JBI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely 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 EV 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 go over the fresh hedge fund action regarding Janus International Group Inc (NYSE:JBI).
Do Hedge Funds Think JBI Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the first quarter of 2020. On the other hand, there were a total of 18 hedge funds with a bullish position in JBI a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Corsair Capital Management held the most valuable stake in Janus International Group Inc (NYSE:JBI), which was worth $45.3 million at the end of the second quarter. On the second spot was Luxor Capital Group which amassed $44.8 million worth of shares. Rima Senvest Management, Ratan Capital Group, and Bayberry Capital Partners 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 Bayberry Capital Partners allocated the biggest weight to Janus International Group Inc (NYSE:JBI), around 9.86% of its 13F portfolio. Corsair Capital Management is also relatively very bullish on the stock, dishing out 7.88 percent of its 13F equity portfolio to JBI.
Because Janus International Group Inc (NYSE:JBI) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there is a sect of money managers who sold off their positions entirely by the end of the second quarter. At the top of the heap, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management said goodbye to the largest stake of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $10.6 million in stock, and Emanuel J. Friedman’s EJF Capital was right behind this move, as the fund sold off about $2.6 million worth. These transactions are interesting, as total hedge fund interest dropped by 4 funds by the end of the second quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Janus International Group Inc (NYSE:JBI) but similarly valued. These stocks are GCM Grosvenor Inc. (NASDAQ:GCMG), Park National Corporation (NYSE:PRK), HNI Corp (NYSE:HNI), ADC Therapeutics SA (NYSE:ADCT), Tellurian Inc. (NASDAQ:TELL), Granite Construction Incorporated (NYSE:GVA), and Tanger Factory Outlet Centers Inc. (NYSE:SKT). This group of stocks’ market valuations resemble JBI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GCMG | 24 | 212751 | 7 |
| PRK | 6 | 3844 | 1 |
| HNI | 15 | 47240 | 3 |
| ADCT | 8 | 239702 | 0 |
| TELL | 17 | 103275 | 5 |
| GVA | 14 | 32797 | 1 |
| SKT | 14 | 51022 | -1 |
| Average | 14 | 98662 | 2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $363 million in JBI’s case. GCM Grosvenor Inc. (NASDAQ:GCMG) is the most popular stock in this table. On the other hand Park National Corporation (NYSE:PRK) is the least popular one with only 6 bullish hedge fund positions. Janus International Group Inc (NYSE:JBI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JBI is 73.8. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately JBI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on JBI were disappointed as the stock returned -5.5% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
