How do we determine whether Johnson Outdoors Inc. (NASDAQ:JOUT) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Johnson Outdoors Inc. (NASDAQ:JOUT) a healthy stock for your portfolio? Investors who are in the know are selling. The number of bullish hedge fund bets fell by 1 in recent months. Our calculations also showed that jout isn’t among the 30 most popular stocks among hedge funds. JOUT was in 12 hedge funds’ portfolios at the end of December. There were 13 hedge funds in our database with JOUT holdings 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 32 percentage points since May 2014 through March 12, 2019 (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.
Cliff Asness of AQR Capital Management
Let’s take a glance at the key hedge fund action regarding Johnson Outdoors Inc. (NASDAQ:JOUT).
Hedge fund activity in Johnson Outdoors Inc. (NASDAQ:JOUT)
At Q4’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards JOUT over the last 14 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jim Simons’s Renaissance Technologies has the biggest position in Johnson Outdoors Inc. (NASDAQ:JOUT), worth close to $19.2 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Steamboat Capital Partners, managed by Parsa Kiai, which holds a $11.5 million position; 4.9% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism contain Chuck Royce’s Royce & Associates, Paul Marshall and Ian Wace’s Marshall Wace LLP and Cliff Asness’s AQR Capital Management.
Because Johnson Outdoors Inc. (NASDAQ:JOUT) has experienced a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of fund managers who sold off their entire stakes by the end of the third quarter. It’s worth mentioning that Peter Algert and Kevin Coldiron’s Algert Coldiron Investors dumped the largest position of the 700 funds followed by Insider Monkey, totaling close to $1.1 million in stock, and Joel Greenblatt’s Gotham Asset Management was right behind this move, as the fund dumped about $0.4 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Johnson Outdoors Inc. (NASDAQ:JOUT) but similarly valued. We will take a look at M/I Homes Inc (NYSE:MHO), KNOT Offshore Partners LP (NYSE:KNOP), Huami Corporation (NYSE:HMI), and Marine Products Corp. (NYSE:MPX). All of these stocks’ market caps are similar to JOUT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MHO | 12 | 34578 | -2 |
| KNOP | 5 | 7135 | 1 |
| HMI | 4 | 4362 | 0 |
| MPX | 6 | 20972 | 1 |
| Average | 6.75 | 16762 | 0 |
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 $17 million. That figure was $57 million in JOUT’s case. M/I Homes Inc (NYSE:MHO) is the most popular stock in this table. On the other hand Huami Corporation (NYSE:HMI) is the least popular one with only 4 bullish hedge fund positions. Johnson Outdoors Inc. (NASDAQ:JOUT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on JOUT, though not to the same extent, as the stock returned 22.4% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
