The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded J2 Global Inc (NASDAQ:JCOM) based on those filings.
J2 Global Inc (NASDAQ:JCOM) was in 21 hedge funds’ portfolios at the end of March. JCOM investors should be aware of a decrease in activity from the world’s largest hedge funds lately. There were 23 hedge funds in our database with JCOM positions at the end of the previous quarter. Our calculations also showed that JCOM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a lot of gauges shareholders can use to assess publicly traded companies. Two of the less utilized gauges are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outclass their index-focused peers by a very impressive amount (see the details here).
Chuck Royce of Royce & Associates
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a glance at the fresh hedge fund action encompassing J2 Global Inc (NASDAQ:JCOM).
Hedge fund activity in J2 Global Inc (NASDAQ:JCOM)
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in JCOM a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Amy Minella’s Cardinal Capital has the largest position in J2 Global Inc (NASDAQ:JCOM), worth close to $82.3 million, accounting for 4% of its total 13F portfolio. On Cardinal Capital’s heels is AQR Capital Management, managed by Cliff Asness, which holds a $57.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism consist of Ken Fisher’s Fisher Asset Management, Chuck Royce’s Royce & Associates and George McCabe’s Portolan Capital Management. In terms of the portfolio weights assigned to each position Cardinal Capital allocated the biggest weight to J2 Global Inc (NASDAQ:JCOM), around 4.05% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, dishing out 1.79 percent of its 13F equity portfolio to JCOM.
Due to the fact that J2 Global Inc (NASDAQ:JCOM) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of fund managers who sold off their full holdings by the end of the first quarter. It’s worth mentioning that Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors cut the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $47.7 million in stock. Daniel S. Och’s fund, OZ Management, also dropped its stock, about $7.7 million worth. These transactions are important to note, as total hedge fund interest dropped by 2 funds by the end of the first quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as J2 Global Inc (NASDAQ:JCOM) but similarly valued. We will take a look at Inphi Corporation (NYSE:IPHI), Under Armour Inc (NYSE:UA), Primerica, Inc. (NYSE:PRI), and Everbridge, Inc. (NASDAQ:EVBG). This group of stocks’ market values match JCOM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IPHI | 36 | 482361 | 5 |
| UA | 37 | 660755 | 5 |
| PRI | 23 | 303962 | -5 |
| EVBG | 31 | 796566 | -6 |
| Average | 31.75 | 560911 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.75 hedge funds with bullish positions and the average amount invested in these stocks was $561 million. That figure was $219 million in JCOM’s case. Under Armour Inc (NYSE:UA) is the most popular stock in this table. On the other hand Primerica, Inc. (NYSE:PRI) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks J2 Global Inc (NASDAQ:JCOM) is even less popular than PRI. Hedge funds dodged a bullet by taking a bearish stance towards JCOM. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but managed to beat the market by 14.8 percentage points. Unfortunately JCOM wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); JCOM investors were disappointed as the stock returned -1.8% during the second quarter (through June 17th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
