Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying for a while now that the current market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the fourth quarter, many investors lost money due to unpredictable events such as the sudden increase in long-term interest rates and unintended consequences of the trade war with China. Nevertheless, many of the stocks that tanked in the third quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to New Jersey Resources Corp (NYSE:NJR) changed recently.
New Jersey Resources Corp (NYSE:NJR) investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. NJR was in 12 hedge funds’ portfolios at the end of the third quarter of 2018. There were 14 hedge funds in our database with NJR holdings at the end of the previous quarter. Our calculations also showed that njr isn’t among the 30 most popular stocks among hedge funds.
At the moment there are tons of metrics market participants use to analyze publicly traded companies. A pair of the most under-the-radar metrics are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can trounce the broader indices by a solid amount (see the details here).
Cliff Asness of AQR Capital Management
We’re going to take a peek at the key hedge fund action regarding New Jersey Resources Corp (NYSE:NJR).
What have hedge funds been doing with New Jersey Resources Corp (NYSE:NJR)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in NJR at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Renaissance Technologies, managed by Jim Simons, holds the largest position in New Jersey Resources Corp (NYSE:NJR). Renaissance Technologies has a $30.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is GLG Partners, managed by Noam Gottesman, which holds a $18.3 million position; 0.1% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions comprise Israel Englander’s Millennium Management, Cliff Asness’s AQR Capital Management and Daniel Arbess’s Perella Weinberg Partners.
Because New Jersey Resources Corp (NYSE:NJR) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few hedgies who were dropping their entire stakes last quarter. It’s worth mentioning that Michael Platt and William Reeves’s BlueCrest Capital Mgmt. dropped the biggest investment of the 700 funds watched by Insider Monkey, worth close to $0.7 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund sold off about $0.5 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as New Jersey Resources Corp (NYSE:NJR) but similarly valued. These stocks are Portland General Electric Company (NYSE:POR), Hancock Whitney Corporation (NASDAQ:HWC), The Wendy’s Company (NASDAQ:WEN), and AU Optronics Corp. (NYSE:AUO). All of these stocks’ market caps are similar to NJR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| POR | 16 | 269447 | 0 |
| HWC | 24 | 192263 | 2 |
| WEN | 27 | 1221248 | 3 |
| AUO | 10 | 56186 | 4 |
| Average | 19.25 | 434786 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $435 million. That figure was $66 million in NJR’s case. The Wendy’s Company (NASDAQ:WEN) is the most popular stock in this table. On the other hand AU Optronics Corp. (NYSE:AUO) is the least popular one with only 10 bullish hedge fund positions. New Jersey Resources Corp (NYSE:NJR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WEN might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
