Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Joby Aviation Inc. (NYSE:JOBY).
Is Joby Aviation Inc. (NYSE:JOBY) a good stock to buy now? Prominent investors were buying. The number of bullish hedge fund bets improved by 21 lately. Joby Aviation Inc. (NYSE:JOBY) was in 21 hedge funds’ portfolios at the end of September. Our calculations also showed that JOBY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a peek at the new hedge fund action regarding Joby Aviation Inc. (NYSE:JOBY).
Seth Klarman of Baupost Group
Do Hedge Funds Think JOBY Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21 from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in JOBY over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Baupost Group held the most valuable stake in Joby Aviation Inc. (NYSE:JOBY), which was worth $96.1 million at the end of the third quarter. On the second spot was Slate Path Capital which amassed $35.2 million worth of shares. Tiger Global Management LLC, Luxor Capital Group, and Alyeska Investment Group 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 Slate Path Capital allocated the biggest weight to Joby Aviation Inc. (NYSE:JOBY), around 1.61% of its 13F portfolio. Baupost Group is also relatively very bullish on the stock, designating 0.88 percent of its 13F equity portfolio to JOBY.
Consequently, some big names have jumped into Joby Aviation Inc. (NYSE:JOBY) headfirst. Baupost Group, managed by Seth Klarman, established the biggest position in Joby Aviation Inc. (NYSE:JOBY). Baupost Group had $96.1 million invested in the company at the end of the quarter. David Greenspan’s Slate Path Capital also initiated a $35.2 million position during the quarter. The other funds with new positions in the stock are Chase Coleman’s Tiger Global Management LLC, Christian Leone’s Luxor Capital Group, and Anand Parekh’s Alyeska Investment Group.
Let’s also examine hedge fund activity in other stocks similar to Joby Aviation Inc. (NYSE:JOBY). These stocks are Lumentum Holdings Inc (NASDAQ:LITE), Primerica, Inc. (NYSE:PRI), Allegro MicroSystems, Inc. (NASDAQ:ALGM), Chesapeake Energy Corporation (NASDAQ:CHK), Landstar System, Inc. (NASDAQ:LSTR), Ardagh Group S.A. (NYSE:ARD), and Blueprint Medicines Corporation (NASDAQ:BPMC). This group of stocks’ market valuations match JOBY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LITE | 33 | 408768 | 4 |
| PRI | 14 | 468979 | -6 |
| ALGM | 14 | 98566 | -3 |
| CHK | 44 | 2174878 | 1 |
| LSTR | 25 | 256357 | 9 |
| ARD | 14 | 154999 | 1 |
| BPMC | 34 | 910776 | -2 |
| Average | 25.4 | 639046 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.4 hedge funds with bullish positions and the average amount invested in these stocks was $639 million. That figure was $232 million in JOBY’s case. Chesapeake Energy Corporation (NASDAQ:CHK) is the most popular stock in this table. On the other hand Primerica, Inc. (NYSE:PRI) is the least popular one with only 14 bullish hedge fund positions. Joby Aviation Inc. (NYSE:JOBY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for JOBY is 28.7. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately JOBY wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); JOBY investors were disappointed as the stock returned -27.4% since the end of September (through 12/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
