Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Janus Henderson Group plc (NYSE:JHG).
Is Janus Henderson Group plc (NYSE:JHG) ready to rally soon? Hedge funds are in a bullish mood. The number of bullish hedge fund positions went up by 2 recently. Our calculations also showed that JHG 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).
At the moment there are many gauges shareholders can use to value their stock investments. A pair of the most innovative gauges are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top fund managers can outclass the S&P 500 by a solid margin (see the details here).
Israel Englander of Millennium 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 let’s check out the key hedge fund action encompassing Janus Henderson Group plc (NYSE:JHG).
How have hedgies been trading Janus Henderson Group plc (NYSE:JHG)?
Heading into the first quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in JHG a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Ariel Investments held the most valuable stake in Janus Henderson Group plc (NYSE:JHG), which was worth $48.6 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $36 million worth of shares. Fisher Asset Management, Renaissance Technologies, and Millennium Management 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 Ariel Investments allocated the biggest weight to Janus Henderson Group plc (NYSE:JHG), around 0.61% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, setting aside 0.21 percent of its 13F equity portfolio to JHG.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Coatue Management, managed by Philippe Laffont, created the most outsized position in Janus Henderson Group plc (NYSE:JHG). Coatue Management had $0.8 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.5 million investment in the stock during the quarter. The other funds with brand new JHG positions are Michael Gelband’s ExodusPoint Capital, Hoon Kim’s Quantinno Capital, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Janus Henderson Group plc (NYSE:JHG) but similarly valued. These stocks are ViaSat, Inc. (NASDAQ:VSAT), Landstar System, Inc. (NASDAQ:LSTR), Immunomedics, Inc. (NASDAQ:IMMU), and NCR Corporation (NYSE:NCR). This group of stocks’ market valuations are similar to JHG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VSAT | 26 | 1810045 | -4 |
| LSTR | 24 | 196876 | 2 |
| IMMU | 28 | 829753 | 6 |
| NCR | 32 | 289779 | -2 |
| Average | 27.5 | 781613 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $782 million. That figure was $199 million in JHG’s case. NCR Corporation (NYSE:NCR) is the most popular stock in this table. On the other hand Landstar System, Inc. (NASDAQ:LSTR) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Janus Henderson Group plc (NYSE:JHG) is even less popular than LSTR. Hedge funds dodged a bullet by taking a bearish stance towards JHG. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but managed to beat the market by 5.5 percentage points. Unfortunately JHG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); JHG investors were disappointed as the stock returned -40.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1.
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.
