The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards JPMorgan Chase & Co. (NYSE:JPM).
Is JPMorgan Chase & Co. (NYSE:JPM) a worthy stock to buy now? Prominent investors were turning less bullish. The number of long hedge fund positions were trimmed by 1 in recent months. JPMorgan Chase & Co. (NYSE:JPM) was in 111 hedge funds’ portfolios at the end of March. The all time high for this statistic is 123. Our calculations also showed that JPM ranked 14th among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Daniel Och, Founder of OZ Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to review the key hedge fund action regarding JPMorgan Chase & Co. (NYSE:JPM).
Do Hedge Funds Think JPM Is A Good Stock To Buy Now?
At Q1’s end, a total of 111 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -1% from the previous quarter. The graph below displays the number of hedge funds with bullish position in JPM over the last 23 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 JPMorgan Chase & Co. (NYSE:JPM) was held by Fisher Asset Management, which reported holding $1018.7 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $484.3 million position. Other investors bullish on the company included Gardner Russo & Gardner, Adage Capital Management, and Brave Warrior Capital. In terms of the portfolio weights assigned to each position Global Frontier Investments allocated the biggest weight to JPMorgan Chase & Co. (NYSE:JPM), around 32.13% of its 13F portfolio. Brave Warrior Capital is also relatively very bullish on the stock, designating 10.85 percent of its 13F equity portfolio to JPM.
Judging by the fact that JPMorgan Chase & Co. (NYSE:JPM) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of money managers who were dropping their full holdings last quarter. At the top of the heap, Daniel Sundheim’s D1 Capital Partners cut the largest stake of the 750 funds tracked by Insider Monkey, comprising an estimated $1013 million in stock. Robert Pitts’s fund, Steadfast Capital Management, also dumped its stock, about $230.4 million worth. These transactions are important to note, as total hedge fund interest was cut by 1 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to JPMorgan Chase & Co. (NYSE:JPM). We will take a look at Visa Inc (NYSE:V), Johnson & Johnson (NYSE:JNJ), Walmart Inc. (NYSE:WMT), Mastercard Incorporated (NYSE:MA), UnitedHealth Group Inc. (NYSE:UNH), The Walt Disney Company (NYSE:DIS), and Bank of America Corporation (NYSE:BAC). All of these stocks’ market caps are similar to JPM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| V | 164 | 26588103 | -2 |
| JNJ | 81 | 6913373 | 0 |
| WMT | 58 | 5881223 | -12 |
| MA | 151 | 17097200 | -3 |
| UNH | 89 | 12091302 | -2 |
| DIS | 134 | 12552763 | -10 |
| BAC | 97 | 45321286 | -2 |
| Average | 110.6 | 18063607 | -4.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 110.6 hedge funds with bullish positions and the average amount invested in these stocks was $18064 million. That figure was $5254 million in JPM’s case. Visa Inc (NYSE:V) is the most popular stock in this table. On the other hand Walmart Inc. (NYSE:WMT) is the least popular one with only 58 bullish hedge fund positions. JPMorgan Chase & Co. (NYSE:JPM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JPM is 69.1. 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 25.8% in 2021 through August 6th and beat the market again by 6.7 percentage points. Unfortunately JPM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on JPM were disappointed as the stock returned 4.7% since the end of March (through 8/6) 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.
Follow Jpmorgan Chase & Co (NYSE:JPM)
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Disclosure: None. This article was originally published at Insider Monkey.
