Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Jack in the Box Inc. (NASDAQ:JACK).
Is JACK a good stock to buy now? Jack in the Box Inc. (NASDAQ:JACK) was in 38 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 36. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. JACK has seen an increase in hedge fund interest in recent months. There were 31 hedge funds in our database with JACK holdings at the end of June. Our calculations also showed that JACK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most shareholders, hedge funds are assumed to be underperforming, old investment vehicles of years past. While there are more than 8000 funds with their doors open today, Our experts look at the bigwigs of this club, about 850 funds. These investment experts shepherd the majority of the smart money’s total capital, and by keeping track of their unrivaled stock picks, Insider Monkey has determined a few investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Glenn Welling of Engaged Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to take a look at the recent hedge fund action regarding Jack in the Box Inc. (NASDAQ:JACK).
Do Hedge Funds Think JACK Is A Good Stock To Buy Now?
At third quarter’s end, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in JACK over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Jack in the Box Inc. (NASDAQ:JACK). Citadel Investment Group has a $48.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which holds a $32 million position; 0.1% of its 13F portfolio is allocated to the company. Some other peers with similar optimism consist of Glenn W. Welling’s Engaged Capital, Brandon Haley’s Holocene Advisors and Louis Bacon’s Moore Global Investments. In terms of the portfolio weights assigned to each position Engaged Capital allocated the biggest weight to Jack in the Box Inc. (NASDAQ:JACK), around 2.9% of its 13F portfolio. Kettle Hill Capital Management is also relatively very bullish on the stock, dishing out 2.07 percent of its 13F equity portfolio to JACK.
Now, some big names were breaking ground themselves. Renaissance Technologies, assembled the biggest position in Jack in the Box Inc. (NASDAQ:JACK). Renaissance Technologies had $20.8 million invested in the company at the end of the quarter. Clint Carlson’s Carlson Capital also initiated a $9.4 million position during the quarter. The other funds with brand new JACK positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Minhua Zhang’s Weld Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Jack in the Box Inc. (NASDAQ:JACK) but similarly valued. These stocks are Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB), Cerence Inc. (NASDAQ:CRNC), Assured Guaranty Ltd. (NYSE:AGO), AtriCure Inc. (NASDAQ:ATRC), The Goodyear Tire & Rubber Company (NASDAQ:GT), Rush Enterprises, Inc. (NASDAQ:RUSHB), and Easterly Government Properties Inc (NYSE:DEA). This group of stocks’ market caps resemble JACK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OMAB | 7 | 28689 | 3 |
| CRNC | 12 | 135180 | -2 |
| AGO | 27 | 205479 | 2 |
| ATRC | 21 | 224194 | -2 |
| GT | 24 | 166177 | 3 |
| RUSHB | 2 | 37287 | -2 |
| DEA | 13 | 127817 | -2 |
| Average | 15.1 | 132118 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $132 million. That figure was $315 million in JACK’s case. Assured Guaranty Ltd. (NYSE:AGO) is the most popular stock in this table. On the other hand Rush Enterprises, Inc. (NASDAQ:RUSHB) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Jack in the Box Inc. (NASDAQ:JACK) is more popular among hedge funds. Our overall hedge fund sentiment score for JACK is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on JACK as the stock returned 16.3% since the end of September (through 12/18) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
