The market has been volatile in the last few months as the Federal Reserve finalized its rate cuts and uncertainty looms over trade negotiations with China. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points over the last 12 months. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, though some funds increased their exposure dramatically at the end of Q3 and the beginning of Q4. In this article, we analyze what the smart money thinks of John Wiley & Sons Inc (NYSE:JW) and find out how it is affected by hedge funds’ moves.
Is John Wiley & Sons Inc (NYSE:JW) worth your attention right now? Prominent investors are getting more bullish. The number of bullish hedge fund bets improved by 1 recently. Our calculations also showed that JW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). JW was in 18 hedge funds’ portfolios at the end of the third quarter of 2019. There were 17 hedge funds in our database with JW holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ray Dalio of Bridgewater Associates
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a gander at the recent hedge fund action surrounding John Wiley & Sons Inc (NYSE:JW).
What does smart money think about John Wiley & Sons Inc (NYSE:JW-A)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in JW over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of John Wiley & Sons Inc (NYSE:JW), with a stake worth $29.8 million reported as of the end of September. Trailing AQR Capital Management was Millennium Management, which amassed a stake valued at $16.2 million. GLG Partners, Renaissance Technologies, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Clearline Capital allocated the biggest weight to John Wiley & Sons Inc (NYSE:JW), around 3.19% of its 13F portfolio. GLG Partners is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to JW.
Now, key money managers were breaking ground themselves. Clearline Capital, managed by Marc Majzner, initiated the largest position in John Wiley & Sons Inc (NYSE:JW). Clearline Capital had $7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $1.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Ray Dalio’s Bridgewater Associates, and Chuck Royce’s Royce & Associates.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as John Wiley & Sons Inc (NYSE:JW) but similarly valued. These stocks are Summit Materials Inc (NYSE:SUM), Stantec Inc. (NYSE:STN), First Financial Bancorp (NASDAQ:FFBC), and Altair Engineering Inc. (NASDAQ:ALTR). All of these stocks’ market caps are similar to JW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SUM | 24 | 648854 | 2 |
| STN | 6 | 82873 | 0 |
| FFBC | 7 | 14549 | -1 |
| ALTR | 10 | 129177 | -4 |
| Average | 11.75 | 218863 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $219 million. That figure was $103 million in JW’s case. Summit Materials Inc (NYSE:SUM) is the most popular stock in this table. On the other hand Stantec Inc. (NYSE:STN) is the least popular one with only 6 bullish hedge fund positions. John Wiley & Sons Inc (NYSE:JW) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on JW, though not to the same extent, as the stock returned 8.4% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
