With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was JPMorgan Chase & Co. (NYSE:JPM).
Is JPMorgan Chase & Co. (NYSE:JPM) undervalued? Hedge funds were selling. The number of bullish hedge fund positions decreased by 6 lately. JPMorgan Chase & Co. (NYSE:JPM) was in 112 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 123. There is good news though. Our calculations also showed that JPM still ranked 17th among the 30 most popular stocks among hedge funds (click for Q4 rankings).
If you’d ask most shareholders, hedge funds are perceived as slow, old financial tools of the past. While there are greater than 8000 funds trading at the moment, Our experts look at the top tier of this club, about 850 funds. These money managers manage the lion’s share of all hedge funds’ total capital, and by tailing their first-class investments, Insider Monkey has figured out various investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 11 short targets in our latest quarterly update .
Andreas Halvorsen of Viking Global
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Do Hedge Funds Think JPM Is A Good Stock To Buy Now?
At Q4’s end, a total of 112 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the previous quarter. By comparison, 98 hedge funds held shares or bullish call options in JPM 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.
When looking at the institutional investors followed by Insider Monkey, Andreas Halvorsen’s Viking Global has the number one position in JPMorgan Chase & Co. (NYSE:JPM), worth close to $1.0749 billion, accounting for 3% of its total 13F portfolio. The second most bullish fund manager is D1 Capital Partners, managed by Daniel Sundheim, which holds a $1.013 billion position; the fund has 4.8% of its 13F portfolio invested in the stock. Remaining peers with similar optimism encompass Ken Fisher’s Fisher Asset Management, Tom Russo’s Gardner Russo & Gardner and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Global Frontier Investments allocated the biggest weight to JPMorgan Chase & Co. (NYSE:JPM), around 30.24% of its 13F portfolio. Adam Capital is also relatively very bullish on the stock, designating 20.73 percent of its 13F equity portfolio to JPM.
Seeing as JPMorgan Chase & Co. (NYSE:JPM) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of money managers who sold off their entire stakes last quarter. Interestingly, Ricky Sandler’s Eminence Capital said goodbye to the largest stake of the 750 funds watched by Insider Monkey, totaling about $143.8 million in stock, and Warren Buffett’s Berkshire Hathaway was right behind this move, as the fund dropped about $93.1 million worth. These moves are interesting, as total hedge fund interest fell by 6 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as JPMorgan Chase & Co. (NYSE:JPM) but similarly valued. These stocks are Verizon Communications Inc. (NYSE:VZ), Adobe Inc. (NASDAQ:ADBE), Paypal Holdings Inc (NASDAQ:PYPL), salesforce.com, inc. (NYSE:CRM), The Walt Disney Company (NYSE:DIS), Netflix, Inc. (NASDAQ:NFLX), and Intel Corporation (NASDAQ:INTC). This group of stocks’ market values resemble JPM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VZ | 67 | 10502830 | 2 |
| ADBE | 114 | 11927730 | 8 |
| PYPL | 147 | 15961182 | -3 |
| CRM | 97 | 10576035 | -9 |
| DIS | 144 | 16417240 | 32 |
| NFLX | 116 | 15633343 | 12 |
| INTC | 72 | 5578824 | 6 |
| Average | 108.1 | 12371026 | 6.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 108.1 hedge funds with bullish positions and the average amount invested in these stocks was $12371 million. That figure was $6967 million in JPM’s case. Paypal Holdings Inc (NASDAQ:PYPL) is the most popular stock in this table. On the other hand Verizon Communications Inc. (NYSE:VZ) is the least popular one with only 67 bullish hedge fund positions. JPMorgan Chase & Co. (NYSE:JPM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JPM is 69.4. 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% in 2021 through March 12th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on JPM as the stock returned 23.8% since the end of Q4 (through 3/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
