Is JPMorgan Chase & Co. (NYSE:JPM) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Hedge fund managers are getting more pessimistic towards JPMorgan Chase & Co. (NYSE:JPM) at the margin. The number of long hedge fund positions retreated by 10 in recent months. Our calculations also showed that JPM’s popularity ranking declined to 16th among the 30 most popular stocks among hedge funds. JPM was in 90 hedge funds’ portfolios at the end of June. There were 100 hedge funds in our database with JPM positions at the end of the previous quarter.
In the eyes of most stock holders, hedge funds are assumed to be unimportant, outdated investment tools of yesteryear. While there are greater than 8000 funds with their doors open today, We hone in on the aristocrats of this club, around 750 funds. Most estimates calculate that this group of people handle bulk of the smart money’s total capital, and by keeping an eye on their best picks, Insider Monkey has brought to light numerous investment strategies that have historically outperformed the market. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to review the new hedge fund action regarding JPMorgan Chase & Co. (NYSE:JPM).
What does smart money think about JPMorgan Chase & Co. (NYSE:JPM)?
At Q2’s end, a total of 90 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in JPM over the last 16 quarters. 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 stakes substantially (or already accumulated large positions).
Among these funds, Berkshire Hathaway held the most valuable stake in JPMorgan Chase & Co. (NYSE:JPM), which was worth $6653.8 million at the end of the second quarter. On the second spot was Fisher Asset Management which amassed $649.7 million worth of shares. Moreover, Greenhaven Associates, Adage Capital Management, and Renaissance Technologies were also bullish on JPMorgan Chase & Co. (NYSE:JPM), allocating a large percentage of their portfolios to this stock.
Due to the fact that JPMorgan Chase & Co. (NYSE:JPM) has experienced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of funds that elected to cut their positions entirely last quarter. Intriguingly, Lansdowne Partners cut the biggest investment of the “upper crust” of funds followed by Insider Monkey, comprising close to $269.9 million in call options. Julian Robertson’s fund, Tiger Management, also cut its call options, about $76.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 10 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to JPMorgan Chase & Co. (NYSE:JPM). We will take a look at Exxon Mobil Corporation (NYSE:XOM), Walmart Inc. (NYSE:WMT), The Procter & Gamble Company (NYSE:PG), and Bank of America Corporation (NYSE:BAC). This group of stocks’ market valuations are similar to JPM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XOM | 50 | 1332153 | 1 |
| WMT | 56 | 4984995 | -1 |
| PG | 58 | 9859098 | 2 |
| BAC | 94 | 31516647 | -2 |
| Average | 64.5 | 11923223 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 64.5 hedge funds with bullish positions and the average amount invested in these stocks was $11923 million. That figure was $11265 million in JPM’s case. Bank of America Corporation (NYSE:BAC) is the most popular stock in this table. On the other hand Exxon Mobil Corporation (NYSE:XOM) is the least popular one with only 50 bullish hedge fund positions. JPMorgan Chase & Co. (NYSE:JPM) is not the most popular stock in this group but hedge fund interest is still above average. JPM is still a wildly popular hedge fund investment. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on JPM as the stock returned 6% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
