Should You Avoid The Jones Group Inc. (JNY)?

What’s a smart The Jones Group Inc. (NYSE:JNY) investor to do?

If you were to ask many of your peers, hedge funds are assumed to be delayed, old investment vehicles of a forgotten age. Although there are over 8,000 hedge funds with their doors open currently, Insider Monkey aim at the moguls of this club, about 525 funds. It is assumed that this group has its hands on the lion’s share of the hedge fund industry’s total assets, and by tracking their best picks, we’ve figured out a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as necessary, bullish insider trading sentiment is another way to analyze the stock market universe. There are a variety of reasons for a corporate insider to drop shares of his or her company, but just one, very obvious reason why they would buy. Many empirical studies have demonstrated the useful potential of this method if investors know what to do (learn more here).

Furthermore, it’s important to study the newest info about The Jones Group Inc. (NYSE:JNY).

What have hedge funds been doing with The Jones Group Inc. (NYSE:JNY)?

At Q2’s end, a total of 11 of the hedge funds we track were long in this stock, a change of -8% from the previous quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully.

When using filings from the hedgies we track, Richard S. Pzena’s Pzena Investment Management had the largest position in The Jones Group Inc. (NYSE:JNY), worth close to $34.8 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which held a $31 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include David Dreman’s Dreman Value Management, Robert Pohly’s Samlyn Capital and D. E. Shaw’s D E Shaw.

As The Jones Group Inc. (NYSE:JNY) has witnessed a fall in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of funds that elected to cut their entire stakes in Q1. Intriguingly, Boaz Weinstein’s Saba Capital sold off the biggest stake of all the hedgies we key on, valued at an estimated $5.6 million in stock. Peter Rathjens Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also cut its stock, about $1.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 1 funds in Q1.

Insider trading activity in The Jones Group Inc. (NYSE:JNY)

Bullish insider trading is at its handiest when the company in question has experienced transactions within the past 180 days. Over the last 180-day time frame, The Jones Group Inc. (NYSE:JNY) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to The Jones Group Inc. (NYSE:JNY). These stocks are Ann Inc (NYSE:ANN), Stage Stores Inc (NYSE:SSI), Jos. A. Bank Clothiers Inc (NASDAQ:JOSB), Aeropostale, Inc. (NYSE:ARO), and Children’s Place Retail Stores, Inc. (NASDAQ:PLCE). This group of stocks are the members of the apparel stores industry and their market caps match JNY’s market cap.

Using the returns explained by Insider Monkey’s analyses, regular investors should always pay attention to hedge fund and insider trading activity, and The Jones Group Inc. (NYSE:JNY) is an important part of this process.

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