Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Is John Bean Technologies Corporation (NYSE:JBT) a safe investment right now? Prominent investors are getting more bullish. The number of long hedge fund bets moved up by 2 in recent months. Our calculations also showed that jbt isn’t among the 30 most popular stocks among hedge funds. JBT was in 13 hedge funds’ portfolios at the end of the third quarter of 2018. There were 11 hedge funds in our database with JBT positions at the end of the previous quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to take a peek at the new hedge fund action surrounding John Bean Technologies Corporation (NYSE:JBT).
Hedge fund activity in John Bean Technologies Corporation (NYSE:JBT)
Heading into the fourth quarter of 2018, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in JBT at the beginning of this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
Among these funds, Royce & Associates held the most valuable stake in John Bean Technologies Corporation (NYSE:JBT), which was worth $30.8 million at the end of the third quarter. On the second spot was PEAK6 Capital Management which amassed $3.5 million worth of shares. Moreover, Citadel Investment Group, Citadel Investment Group, and PEAK6 Capital Management were also bullish on John Bean Technologies Corporation (NYSE:JBT), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key hedge funds were leading the bulls’ herd. PEAK6 Capital Management, managed by Matthew Hulsizer, assembled the biggest call position in John Bean Technologies Corporation (NYSE:JBT). PEAK6 Capital Management had $3.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $2.6 million investment in the stock during the quarter. The other funds with brand new JBT positions are Noam Gottesman’s GLG Partners, Roger Ibbotson’s Zebra Capital Management, and Frederick DiSanto’s Ancora Advisors.
Let’s also examine hedge fund activity in other stocks similar to John Bean Technologies Corporation (NYSE:JBT). These stocks are United Bankshares, Inc. (NASDAQ:UBSI), Eldorado Resorts Inc (NASDAQ:ERI), Patterson-UTI Energy, Inc. (NASDAQ:PTEN), and Cousins Properties Incorporated (NYSE:CUZ). This group of stocks’ market values are closest to JBT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UBSI | 7 | 38546 | 1 |
| ERI | 24 | 969564 | -3 |
| PTEN | 31 | 472104 | -7 |
| CUZ | 14 | 48177 | 1 |
| Average | 19 | 382098 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $382 million. That figure was $39 million in JBT’s case. Patterson-UTI Energy, Inc. (NASDAQ:PTEN) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 7 bullish hedge fund positions. John Bean Technologies Corporation (NYSE:JBT) 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. In this regard PTEN might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
