We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Piper Jaffray Companies (NYSE:PJC).
Piper Jaffray Companies (NYSE:PJC) has experienced an increase in enthusiasm from smart money of late. Our calculations also showed that PJC isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. Let’s analyze the new hedge fund action regarding Piper Jaffray Companies (NYSE:PJC).
Hedge fund activity in Piper Jaffray Companies (NYSE:PJC)
Heading into the third quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in PJC a year ago. So, let’s find out 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, Renaissance Technologies has the largest position in Piper Jaffray Companies (NYSE:PJC), worth close to $31.9 million, corresponding to less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Fisher Asset Management, managed by Ken Fisher, which holds a $9.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors.
As one would reasonably expect, key hedge funds were leading the bulls’ herd. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the biggest position in Piper Jaffray Companies (NYSE:PJC). Two Sigma Advisors had $0.8 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $0.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Ronald Hua’s Qtron Investments and David Harding’s Winton Capital Management.
Let’s check out hedge fund activity in other stocks similar to Piper Jaffray Companies (NYSE:PJC). These stocks are Livent Corporation (NYSE:LTHM), Glu Mobile Inc. (NASDAQ:GLUU), 3D Systems Corporation (NYSE:DDD), and MTS Systems Corporation (NASDAQ:MTSC). This group of stocks’ market valuations resemble PJC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LTHM | 21 | 167433 | -4 |
| GLUU | 23 | 116556 | -2 |
| DDD | 11 | 38947 | -2 |
| MTSC | 12 | 125808 | 2 |
| Average | 16.75 | 112186 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $112 million. That figure was $50 million in PJC’s case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand 3D Systems Corporation (NYSE:DDD) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Piper Jaffray Companies (NYSE:PJC) is even less popular than DDD. 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 PJC, though not to the same extent, as the stock returned 2.2% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
