Is JLL Stock A Buy or Sell?

In this article we are going to use hedge fund sentiment as a tool and determine whether Jones Lang LaSalle Inc (NYSE:JLL) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is JLL stock a buy? Jones Lang LaSalle Inc (NYSE:JLL) was in 23 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 31. JLL has experienced a decrease in hedge fund interest recently. There were 25 hedge funds in our database with JLL holdings at the end of September. Our calculations also showed that JLL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 S&P 500 ETFs by 124 percentage points since March 2017 (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.

John Rogers of Ariel Investments

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now 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. Now let’s check out the recent hedge fund action regarding Jones Lang LaSalle Inc (NYSE:JLL).

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

At the end of December, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the third quarter of 2020. On the other hand, there were a total of 30 hedge funds with a bullish position in JLL a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Generation Investment Management was the largest shareholder of Jones Lang LaSalle Inc (NYSE:JLL), with a stake worth $723.7 million reported as of the end of December. Trailing Generation Investment Management was Ariel Investments, which amassed a stake valued at $151 million. Southpoint Capital Advisors, Diamond Hill Capital, and Motley Fool Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Marlowe Partners allocated the biggest weight to Jones Lang LaSalle Inc (NYSE:JLL), around 6.62% of its 13F portfolio. Generation Investment Management is also relatively very bullish on the stock, setting aside 3.23 percent of its 13F equity portfolio to JLL.

Because Jones Lang LaSalle Inc (NYSE:JLL) has faced falling interest from hedge fund managers, we can see that there is a sect of hedge funds who were dropping their entire stakes last quarter. Interestingly, Renaissance Technologies dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, valued at close to $1.4 million in stock, and Steve Pei’s Gratia Capital was right behind this move, as the fund cut about $0.6 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Jones Lang LaSalle Inc (NYSE:JLL) but similarly valued. These stocks are American Financial Group, Inc. (NYSE:AFG), Ralph Lauren Corporation (NYSE:RL), Euronet Worldwide, Inc. (NASDAQ:EEFT), Quidel Corporation (NASDAQ:QDEL), The Gap Inc. (NYSE:GPS), Gerdau SA (NYSE:GGB), and Hyatt Hotels Corporation (NYSE:H). This group of stocks’ market caps are similar to JLL’s market cap.

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As you can see these stocks had an average of 28.6 hedge funds with bullish positions and the average amount invested in these stocks was $523 million. That figure was $1094 million in JLL’s case. The Gap Inc. (NYSE:GPS) is the most popular stock in this table. On the other hand Gerdau SA (NYSE:GGB) is the least popular one with only 15 bullish hedge fund positions. Jones Lang LaSalle Inc (NYSE:JLL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for JLL is 42.6. 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 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on JLL as the stock returned 20.9% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.

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