Should I Buy Jefferies Financial Group Inc. (JEF)?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million 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 September 30th. We at Insider Monkey have made an extensive database of more than 867 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Jefferies Financial Group Inc. (NYSE:JEF) based on those filings.

Jefferies Financial Group Inc. (NYSE:JEF) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. Jefferies Financial Group Inc. (NYSE:JEF) was in 37 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 39. There were 29 hedge funds in our database with JEF holdings at the end of June. Our calculations also showed that JEF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s go over the latest hedge fund action surrounding Jefferies Financial Group Inc. (NYSE:JEF).

Ian Wace of Marshall Wace

Do Hedge Funds Think JEF Is A Good Stock To Buy Now?

At third quarter’s end, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 28% from the previous quarter. The graph below displays the number of hedge funds with bullish position in JEF over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Jefferies Financial Group Inc. (NYSE:JEF) was held by First Pacific Advisors LLC, which reported holding $252.4 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $142.6 million position. Other investors bullish on the company included AQR Capital Management, Hosking Partners, and Pacifica Capital Investments. In terms of the portfolio weights assigned to each position Moerus Capital Management allocated the biggest weight to Jefferies Financial Group Inc. (NYSE:JEF), around 10.1% of its 13F portfolio. Pacifica Capital Investments is also relatively very bullish on the stock, designating 9.49 percent of its 13F equity portfolio to JEF.

Now, key money managers were breaking ground themselves. Luxor Capital Group, managed by Christian Leone, established the most outsized position in Jefferies Financial Group Inc. (NYSE:JEF). Luxor Capital Group had $25.8 million invested in the company at the end of the quarter. Daniel Johnson’s Gillson Capital also initiated a $6.9 million position during the quarter. The following funds were also among the new JEF investors: Matthew Hulsizer’s PEAK6 Capital Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Michael Gelband’s ExodusPoint Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Jefferies Financial Group Inc. (NYSE:JEF) but similarly valued. We will take a look at Alcoa Corporation (NYSE:AA), Mirati Therapeutics, Inc. (NASDAQ:MRTX), West Fraser Timber Co. Ltd. (NYSE:WFG), XPO Logistics Inc (NYSE:XPO), Tempur Sealy International Inc. (NYSE:TPX), Concentrix Corporation (NASDAQ:CNXC), and AECOM (NYSE:ACM). This group of stocks’ market caps match JEF’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $1366 million. That figure was $684 million in JEF’s case. XPO Logistics Inc (NYSE:XPO) is the most popular stock in this table. On the other hand Concentrix Corporation (NASDAQ:CNXC) is the least popular one with only 21 bullish hedge fund positions. Jefferies Financial Group Inc. (NYSE:JEF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JEF is 67. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately JEF wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on JEF were disappointed as the stock returned 1.8% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Suggested Articles:

• 15 Largest Law Firms In The World
• 10 Best Tech Stocks to Buy According to Japanese Billionaire Masayoshi Son
• 11 Best Natural Gas Stocks To Buy Now

Disclosure: None. This article was originally published at Insider Monkey.