Legendary investors such as Jeffrey Talpins and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Janus Henderson Group plc (NYSE:JHG) from the perspective of those elite funds.
Janus Henderson Group plc (NYSE:JHG) investors should pay attention to an increase in enthusiasm from smart money recently. JHG was in 15 hedge funds’ portfolios at the end of June. There were 12 hedge funds in our database with JHG holdings at the end of the previous quarter. Our calculations also showed that JHG isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 40 percentage points since May 2014 through May 30, 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.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a peek at the recent hedge fund action surrounding Janus Henderson Group plc (NYSE:JHG).
What have hedge funds been doing with Janus Henderson Group plc (NYSE:JHG)?
At the end of the second quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in JHG over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Janus Henderson Group plc (NYSE:JHG), which was worth $46.6 million at the end of the second quarter. On the second spot was Ariel Investments which amassed $41.9 million worth of shares. Moreover, Fisher Asset Management, Arrowstreet Capital, and Citadel Investment Group were also bullish on Janus Henderson Group plc (NYSE:JHG), allocating a large percentage of their portfolios to this stock.
Now, key hedge funds have been driving this bullishness. D E Shaw, managed by D. E. Shaw, assembled the most outsized position in Janus Henderson Group plc (NYSE:JHG). D E Shaw had $4.2 million invested in the company at the end of the quarter. Peter Seuss’s Prana Capital Management also made a $2.2 million investment in the stock during the quarter. The following funds were also among the new JHG investors: Dmitry Balyasny’s Balyasny Asset Management, Noam Gottesman’s GLG Partners, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Janus Henderson Group plc (NYSE:JHG) but similarly valued. These stocks are Graphic Packaging Holding Company (NYSE:GPK), Stifel Financial Corp. (NYSE:SF), Viper Energy Partners LP (NASDAQ:VNOM), and Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL). This group of stocks’ market valuations are closest to JHG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GPK | 30 | 534112 | 6 |
| SF | 15 | 160961 | -1 |
| VNOM | 13 | 160127 | -4 |
| CBRL | 22 | 201300 | -1 |
| Average | 20 | 264125 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $264 million. That figure was $198 million in JHG’s case. Graphic Packaging Holding Company (NYSE:GPK) is the most popular stock in this table. On the other hand Viper Energy Partners LP (NASDAQ:VNOM) is the least popular one with only 13 bullish hedge fund positions. Janus Henderson Group plc (NYSE:JHG) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on JHG as the stock returned 6.9% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
