At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Jerash Holdings (US), Inc. (NASDAQ:JRSH).
Jerash Holdings (US), Inc. (NASDAQ:JRSH) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of March. At the end of this article we will also compare JRSH to other stocks including AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO), J Alexander’s Holdings Inc (NYSE:JAX), and Lee Enterprises, Incorporated (NYSE:LEE) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are tons of formulas shareholders can use to evaluate stocks. Some of the less known formulas are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can outclass their index-focused peers by a solid amount (see the details here).
Chuck Royce of Royce & Associates
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Keeping this in mind let’s take a glance at the new hedge fund action regarding Jerash Holdings (US), Inc. (NASDAQ:JRSH).
What does smart money think about Jerash Holdings (US), Inc. (NASDAQ:JRSH)?
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 1 hedge funds held shares or bullish call options in JRSH a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
The largest stake in Jerash Holdings (US), Inc. (NASDAQ:JRSH) was held by Royce & Associates, which reported holding $0.6 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $0.1 million position. The only other hedge fund that is bullish on the company was Millennium Management.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now review hedge fund activity in other stocks similar to Jerash Holdings (US), Inc. (NASDAQ:JRSH). We will take a look at AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO), J Alexander’s Holdings Inc (NYSE:JAX), Lee Enterprises, Incorporated (NYSE:LEE), and Summit Midstream Partners LP (NYSE:SMLP). This group of stocks’ market values resemble JRSH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AVEO | 4 | 781 | -2 |
| JAX | 9 | 9687 | -1 |
| LEE | 13 | 10356 | 5 |
| SMLP | 1 | 17 | -3 |
| Average | 6.75 | 5210 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $1 million in JRSH’s case. Lee Enterprises, Incorporated (NYSE:LEE) is the most popular stock in this table. On the other hand Summit Midstream Partners LP (NYSE:SMLP) is the least popular one with only 1 bullish hedge fund positions. Jerash Holdings (US), Inc. (NASDAQ:JRSH) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd and surpassed the market by 15.6 percentage points. Unfortunately JRSH wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); JRSH investors were disappointed as the stock returned -7.2% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.
