Successful Hedge Funds Seeing A Lot of Gloom in Joy Global Inc. (JOY)

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Joy Global Inc. (NYSE:JOY) was in 21 hedge funds’ portfolios at the end of the third quarter of 2016. JOY has seen a decrease in activity from the world’s largest hedge funds recently. There were 22 hedge funds in our database with JOY holdings at the end of the previous 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 WP Glimcher Inc (NYSE:WPG), Interval Leisure Group, Inc. (NASDAQ:IILG), and Shopify Inc (NYSE:SHOP) 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 Joy Global Inc. (NYSE:JOY)?

Heading into the fourth quarter of 2016, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a dip of 5% from the second quarter of 2016. Hedge fund ownership of JOY has gradually trended down throughout the last year, save for a Q1 gain. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, D E Shaw has the biggest position in Joy Global Inc. (NYSE:JOY), worth close to $75.9 million. The second most bullish fund manager is TIG Advisors, managed by Carl Tiedemann and Michael Tiedemann, which holds a $54.2 million position; 4.7% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism consist of Robert Emil Zoellner’s Alpine Associates, Joel Greenblatt’s Gotham Asset Management and Neil Chriss’ Hutchin Hill Capital.

Judging by the fact that Joy Global Inc. (NYSE:JOY) has faced falling interest from the smart money, it’s easy to see that there lies a certain “tier” of money managers that slashed their full holdings in the third quarter. Intriguingly, Israel Englander’s Millennium Management dumped the largest position of the “upper crust” of funds monitored by Insider Monkey, totaling about $12.5 million in stock, and Principal Global Investors’ Columbus Circle Investors was right behind this move, as the fund cut about $8.5 million worth of shares. These transactions are interesting, as aggregate hedge fund interest was cut by 1 fund in the third quarter.

Let’s go over hedge fund activity in other stocks similar to Joy Global Inc. (NYSE:JOY). We will take a look at WP Glimcher Inc (NYSE:WPG), Interval Leisure Group, Inc. (NASDAQ:IILG), Shopify Inc (NYSE:SHOP), and Hilltop Holdings Inc. (NYSE:HTH). All of these stocks’ market caps match JOY’s market cap.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $213 million. That figure was $337 million in JOY’s case. Shopify Inc (NYSE:SHOP) is the most popular stock in this table. On the other hand WP Glimcher Inc (NYSE:WPG) is the least popular one with only 13 bullish hedge fund positions. Joy Global Inc. (NYSE:JOY) 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 SHOP might be a better candidate to consider a long position in.

Disclosure: None