Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Jones Lang LaSalle Inc (NYSE:JLL)? The smart money sentiment can provide an answer to this question.
Is Jones Lang LaSalle Inc (NYSE:JLL) the right investment to pursue these days? Investors who are in the know are in an optimistic mood. The number of bullish hedge fund bets inched up by 3 recently. Our calculations also showed that JLL isn’t among the 30 most popular stocks among hedge funds. JLL was in 21 hedge funds’ portfolios at the end of the third quarter of 2018. There were 18 hedge funds in our database with JLL positions at the end of the previous quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to take a glance at the key hedge fund action encompassing Jones Lang LaSalle Inc (NYSE:JLL).
How have hedgies been trading Jones Lang LaSalle Inc (NYSE:JLL)?
At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards JLL over the last 13 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Generation Investment Management, managed by David Blood and Al Gore, holds the most valuable position in Jones Lang LaSalle Inc (NYSE:JLL). Generation Investment Management has a $613.5 million position in the stock, comprising 4.9% of its 13F portfolio. Coming in second is Ariel Investments, managed by John W. Rogers, which holds a $103.3 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions include Ric Dillon’s Diamond Hill Capital, James Parsons’s Junto Capital Management and Chuck Royce’s Royce & Associates.
As aggregate interest increased, key hedge funds have jumped into Jones Lang LaSalle Inc (NYSE:JLL) headfirst. Junto Capital Management, managed by James Parsons, assembled the most outsized position in Jones Lang LaSalle Inc (NYSE:JLL). Junto Capital Management had $24.8 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $4.1 million investment in the stock during the quarter. The following funds were also among the new JLL investors: Matthew Hulsizer’s PEAK6 Capital Management, David Costen Haley’s HBK Investments, and Steve Cohen’s Point72 Asset Management.
Let’s now take a look at hedge fund activity in other stocks similar to Jones Lang LaSalle Inc (NYSE:JLL). We will take a look at Omega Healthcare Investors Inc (NYSE:OHI), Western Gas Equity Partners LP (NYSE:WGP), EnLink Midstream Partners LP (NYSE:ENLK), and Post Holdings Inc (NYSE:POST). This group of stocks’ market caps resemble JLL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OHI | 12 | 41625 | 2 |
| WGP | 5 | 60856 | 1 |
| ENLK | 4 | 12285 | -1 |
| POST | 29 | 1593536 | 7 |
| Average | 12.5 | 427076 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $427 million. That figure was $858 million in JLL’s case. Post Holdings Inc (NYSE:POST) is the most popular stock in this table. On the other hand EnLink Midstream Partners LP (NYSE:ENLK) is the least popular one with only 4 bullish hedge fund positions. Jones Lang LaSalle Inc (NYSE:JLL) 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 POST might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
