Juniper Networks, Inc. (JNPR): Has Smart Money Ownership Finally Hit Rock-Bottom?

Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Juniper Networks, Inc. (NYSE:JNPR).

Juniper Networks, Inc. (NYSE:JNPR) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 27 hedge funds’ portfolios at the end of the third quarter of 2016, same as at the end of the second quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Tripadvisor Inc (NASDAQ:TRIP), Advanced Semiconductor Engineering (ADR) (NYSE:ASX), and J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What have hedge funds been doing with Juniper Networks, Inc. (NYSE:JNPR)?

At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards JNPR over the last 5 quarters, which has trended sharply downward. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Ric Dillon’s Diamond Hill Capital has the biggest position in Juniper Networks, Inc. (NYSE:JNPR), worth close to $178.5 million, comprising 1.1% of its total 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $67.5 million position. Some other professional money managers that hold long positions consist of Ray Dalio’s Bridgewater Associates, Jim Simons’ Renaissance Technologies, and Ken Griffin’s Citadel Investment Group. We should note that Bridgewater Associates is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Seeing as Juniper Networks, Inc. (NYSE:JNPR) has weathered falling interest from hedge fund managers, it’s safe to say that there is a sect of money managers who were dropping their entire stakes last quarter. Intriguingly, Citadel Investment Group said goodbye to the biggest investment of all the hedgies tracked by Insider Monkey, valued at an estimated $5.8 million in call options, while retaining its aforementioned long position. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its call options, about $2.2 million worth.

Let’s now take a look at hedge fund activity in other stocks similar to Juniper Networks, Inc. (NYSE:JNPR). These stocks are Tripadvisor Inc (NASDAQ:TRIP), Advanced Semiconductor Engineering (ADR) (NYSE:ASX), J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), and ResMed Inc. (NYSE:RMD). This group of stocks’ market caps are similar to JNPR’s market cap.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $402 million. That figure was $478 million in JNPR’s case. Tripadvisor Inc (NASDAQ:TRIP) is the most popular stock in this table. On the other hand Advanced Semiconductor Engineering (ADR) (NYSE:ASX) is the least popular one with only 15 bullish hedge fund positions. Juniper Networks, Inc. (NYSE:JNPR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TRIP might be a better candidate to consider taking a long position in.

Disclosure: None