Is JEF Stock A Buy or Sell?

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 Jefferies Financial Group Inc. (NYSE:JEF).

Is JEF stock a buy or sell? Hedge fund interest in Jefferies Financial Group Inc. (NYSE:JEF) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that JEF isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). 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 Blueprint Medicines Corporation (NASDAQ:BPMC), Grupo Aeroportuario del Pacifico, S.A.B. de C.V. (NYSE:PAC), and Lattice Semiconductor Corporation (NASDAQ:LSCC) to gather more data points.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Paul Tudor Jones of Tudor Investment Corp

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 check out the latest hedge fund action encompassing Jefferies Financial Group Inc. (NYSE:JEF).

Do Hedge Funds Think JEF Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 31 hedge funds with a bullish position in JEF a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Jefferies Financial Group Inc. (NYSE:JEF) was held by First Pacific Advisors LLC, which reported holding $346.9 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $94.5 million position. Other investors bullish on the company included Millennium Management, Moerus Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Moerus Capital Management allocated the biggest weight to Jefferies Financial Group Inc. (NYSE:JEF), around 14.66% of its 13F portfolio. Pacifica Capital Investments is also relatively very bullish on the stock, dishing out 7.65 percent of its 13F equity portfolio to JEF.

Judging by the fact that Jefferies Financial Group Inc. (NYSE:JEF) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedgies who sold off their entire stakes heading into Q1. Interestingly, Kenneth Mario Garschina’s Mason Capital Management dumped the biggest stake of the 750 funds followed by Insider Monkey, valued at close to $64.6 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund dumped about $2.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks similar to Jefferies Financial Group Inc. (NYSE:JEF). These stocks are Blueprint Medicines Corporation (NASDAQ:BPMC), Grupo Aeroportuario del Pacifico, S.A.B. de C.V. (NYSE:PAC), Lattice Semiconductor Corporation (NASDAQ:LSCC), Exelixis, Inc. (NASDAQ:EXEL), Tetra Tech, Inc. (NASDAQ:TTEK), Littelfuse, Inc. (NASDAQ:LFUS), and AppFolio Inc (NASDAQ:APPF). This group of stocks’ market values resemble JEF’s market value.

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As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $516 million. That figure was $700 million in JEF’s case. Blueprint Medicines Corporation (NASDAQ:BPMC) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacifico, S.A.B. de C.V. (NYSE:PAC) is the least popular one with only 4 bullish hedge fund positions. Jefferies Financial Group Inc. (NYSE:JEF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JEF is 73. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on JEF as the stock returned 24.4% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.