We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional 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. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards James River Group Holdings Ltd (NASDAQ:JRVR) and determine whether hedge funds skillfully traded this stock.
Is James River Group Holdings Ltd (NASDAQ:JRVR) ready to rally soon? The smart money was buying. The number of long hedge fund positions inched up by 3 in recent months. Our calculations also showed that JRVR 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.
At the moment there are a large number of tools stock market investors have at their disposal to grade publicly traded companies. A duo of the most innovative tools are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the best investment managers can beat the S&P 500 by a superb margin (see the details here).
Richard Driehaus of Driehaus Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 10 biggest gold mining companies to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s check out the latest hedge fund action encompassing James River Group Holdings Ltd (NASDAQ:JRVR).
What does smart money think about James River Group Holdings Ltd (NASDAQ:JRVR)?
Heading into the second quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards JRVR over the last 18 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of James River Group Holdings Ltd (NASDAQ:JRVR), with a stake worth $20.4 million reported as of the end of September. Trailing Renaissance Technologies was Polar Capital, which amassed a stake valued at $19.9 million. Royce & Associates, Winton Capital Management, and Driehaus Capital 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 Polar Capital allocated the biggest weight to James River Group Holdings Ltd (NASDAQ:JRVR), around 0.21% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.2 percent of its 13F equity portfolio to JRVR.
As aggregate interest increased, key hedge funds have jumped into James River Group Holdings Ltd (NASDAQ:JRVR) headfirst. Driehaus Capital, managed by Richard Driehaus, created the most valuable position in James River Group Holdings Ltd (NASDAQ:JRVR). Driehaus Capital had $4.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $2.1 million position during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Greg Eisner’s Engineers Gate Manager, and Brandon Haley’s Holocene Advisors.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as James River Group Holdings Ltd (NASDAQ:JRVR) but similarly valued. These stocks are Aurora Cannabis Inc. (NASDAQ:ACB), Tricida, Inc. (NASDAQ:TCDA), Kaiser Aluminum Corp. (NASDAQ:KALU), and Rush Enterprises, Inc. (NASDAQ:RUSHB). This group of stocks’ market caps resemble JRVR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ACB | 9 | 12761 | -3 |
| TCDA | 24 | 462077 | 0 |
| KALU | 16 | 75036 | -1 |
| RUSHB | 3 | 27046 | -1 |
| Average | 13 | 144230 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $144 million. That figure was $73 million in JRVR’s case. Tricida, Inc. (NASDAQ:TCDA) is the most popular stock in this table. On the other hand Rush Enterprises, Inc. (NASDAQ:RUSHB) is the least popular one with only 3 bullish hedge fund positions. James River Group Holdings Ltd (NASDAQ:JRVR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on JRVR, though not to the same extent, as the stock returned 22.4% during the second quarter and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
