“Value has performed relatively poorly since the 2017 shift, but we believe challenges to the S&P 500’s dominance are mounting and resulting active opportunities away from the index are growing. At some point, this fault line will break, likely on the back of rising rates, and all investors will be reminded that the best time to diversify away from the winners is when it is most painful. The bargain of capturing long-term value may be short-term pain, but enough is eventually enough and it comes time to harvest the benefits.,” said Clearbridge Investments in its market commentary. We aren’t sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Jack Henry & Associates, Inc. (NASDAQ:JKHY) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Jack Henry & Associates, Inc. (NASDAQ:JKHY) investors should pay attention to an increase in enthusiasm from smart money recently. JKHY was in 21 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 14 hedge funds in our database with JKHY positions at the end of the previous quarter. Our calculations also showed that JKHY isn’t among the 30 most popular stocks among hedge funds.
To the average investor there are numerous methods stock market investors use to assess their stock investments. A couple of the less known methods are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat the broader indices by a superb margin (see the details here).
Let’s take a look at the recent hedge fund action regarding Jack Henry & Associates, Inc. (NASDAQ:JKHY).
How are hedge funds trading Jack Henry & Associates, Inc. (NASDAQ:JKHY)?
At the end of the fourth quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards JKHY over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Jack Henry & Associates, Inc. (NASDAQ:JKHY), which was worth $57.2 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $48 million worth of shares. Moreover, Royce & Associates, Millennium Management, and Echo Street Capital Management were also bullish on Jack Henry & Associates, Inc. (NASDAQ:JKHY), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, some big names were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, established the most outsized position in Jack Henry & Associates, Inc. (NASDAQ:JKHY). Point72 Asset Management had $5.8 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $3.1 million position during the quarter. The following funds were also among the new JKHY investors: Phill Gross and Robert Atchinson’s Adage Capital Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Sander Gerber’s Hudson Bay Capital Management.
Let’s go over hedge fund activity in other stocks similar to Jack Henry & Associates, Inc. (NASDAQ:JKHY). We will take a look at Braskem SA (NYSE:BAK), Kansas City Southern (NYSE:KSU), WestRock Company (NYSE:WRK), and IDEX Corporation (NYSE:IEX). This group of stocks’ market valuations resemble JKHY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BAK | 9 | 312108 | -4 |
| KSU | 20 | 371136 | -4 |
| WRK | 29 | 453752 | -4 |
| IEX | 19 | 273611 | -4 |
| Average | 19.25 | 352652 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $353 million. That figure was $198 million in JKHY’s case. WestRock Company (NYSE:WRK) is the most popular stock in this table. On the other hand Braskem SA (NYSE:BAK) is the least popular one with only 9 bullish hedge fund positions. Jack Henry & Associates, Inc. (NASDAQ:JKHY) is not the most popular stock in this group but hedge fund interest is still above average. 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 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately JKHY wasn’t in this group. Hedge funds that bet on JKHY were disappointed as the stock returned 8.8% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
