Is JAKKS Pacific, Inc. (JAKK) a Good Buy?

Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last 12 months ending in October 30. Sixty three percent of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell 50% and 26%, respectively during the same time period, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of JAKKS Pacific, Inc. (NASDAQ:JAKK).

Is JAKKS Pacific, Inc. (NASDAQ:JAKK) worth your attention right now? Hedge funds are buying. The number of long hedge fund positions moved up by 2 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Calamos Asset Management, Inc (NASDAQ:CLMS), Medley Management Inc (NYSE:MDLY), and Pernix Therapeutics Holdings Inc (NASDAQ:PTX) to gather more data points.

Keeping this in mind, let’s review the fresh action surrounding JAKKS Pacific, Inc. (NASDAQ:JAKK).

Hedge fund activity in JAKKS Pacific, Inc. (NASDAQ:JAKK)

At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the biggest position in JAKKS Pacific, Inc. (NASDAQ:JAKK). Renaissance Technologies has a $17.5 million position in the stock, comprising less than 0.1% of its 13F portfolio. On Renaissance Technologies’s heels is Yale M. Fergang and Robert W. Medway of Royal Capital, with a $3.5 million position; the fund has 9.3% of its 13F portfolio invested in the stock. Remaining peers that hold long positions contain Ken Grossman and Glen Schneider’s SG Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Peter Muller’s PDT Partners.

Now, specific money managers have been driving this bullishness. SG Capital Management, managed by Ken Grossman and Glen Schneider, assembled the biggest position in JAKKS Pacific, Inc. (NASDAQ:JAKK). SG Capital Management had $2.3 million invested in the company at the end of the quarter. Eric Edidin and Josh Lobel’s Archer Capital Management also made a $1.1 million investment in the stock during the quarter. The following funds were also among the new JAKK investors: Glenn Russell Dubin’s Highbridge Capital Management, Cliff Asness’ AQR Capital Management, and Chao Ku’s Nine Chapters Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as JAKKS Pacific, Inc. (NASDAQ:JAKK) but similarly valued. We will take a look at Calamos Asset Management, Inc (NASDAQ:CLMS), Medley Management Inc (NYSE:MDLY), Pernix Therapeutics Holdings Inc (NASDAQ:PTX), and Pendrell Corporation – Class A (NASDAQ:PCO). This group of stocks’ market caps are closest to JAKK’s market cap.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $31 million in JAKK’s case. Pernix Therapeutics Holdings Inc (NASDAQ:PTX) is the most popular stock in this table. On the other hand Medley Management Inc (NYSE:MDLY) is the least popular one with only 4 bullish hedge fund positions. JAKKS Pacific, Inc. (NASDAQ:JAKK) 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. In this regard PTX might be a better candidate to consider a long position.