While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and optimism towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the first quarter and hedging or reducing many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding The St. Joe Company (NYSE:JOE).
Is The St. Joe Company (NYSE:JOE) the right investment to pursue these days? Money managers are betting on the stock. The number of bullish hedge fund positions rose by 1 recently. Our calculations also showed that JOE isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s take a peek at the latest hedge fund action encompassing The St. Joe Company (NYSE:JOE).
Hedge fund activity in The St. Joe Company (NYSE:JOE)
Heading into the second quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the fourth quarter of 2018. By comparison, 13 hedge funds held shares or bullish call options in JOE a year ago. 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, Fairholme (FAIRX) held the most valuable stake in The St. Joe Company (NYSE:JOE), which was worth $437.5 million at the end of the first quarter. On the second spot was GAMCO Investors which amassed $24.8 million worth of shares. Moreover, Royce & Associates, Renaissance Technologies, and GMT Capital were also bullish on The St. Joe Company (NYSE:JOE), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, specific money managers have jumped into The St. Joe Company (NYSE:JOE) headfirst. GMT Capital, managed by Thomas E. Claugus, created the most outsized position in The St. Joe Company (NYSE:JOE). GMT Capital had $3.2 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $0.4 million position during the quarter. The only other fund with a brand new JOE position is Noam Gottesman’s GLG Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The St. Joe Company (NYSE:JOE) but similarly valued. These stocks are TPI Composites, Inc. (NASDAQ:TPIC), Celestica Inc. (NYSE:CLS), BJ’s Restaurants, Inc. (NASDAQ:BJRI), and Sandstorm Gold Ltd. (NYSE:SAND). This group of stocks’ market caps are similar to JOE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TPIC | 19 | 137247 | 6 |
| CLS | 15 | 81881 | 1 |
| BJRI | 19 | 150999 | -2 |
| SAND | 12 | 44973 | 3 |
| Average | 16.25 | 103775 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $104 million. That figure was $485 million in JOE’s case. TPI Composites, Inc. (NASDAQ:TPIC) is the most popular stock in this table. On the other hand Sandstorm Gold Ltd. (NYSE:SAND) is the least popular one with only 12 bullish hedge fund positions. The St. Joe Company (NYSE:JOE) 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately JOE wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); JOE investors were disappointed as the stock returned -4.6% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
