Is The St. Joe Company (NYSE:JOE) a buy, sell, or hold? The smart money is becoming more confident. The number of long hedge fund positions increased by 2 recently.
To most market participants, hedge funds are viewed as worthless, outdated financial tools of the past. While there are over 8000 funds with their doors open at present, we look at the leaders of this group, around 450 funds. It is widely believed that this group controls the majority of the hedge fund industry’s total asset base, and by keeping an eye on their highest performing investments, we have deciphered a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced 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 outclassed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Equally as key, optimistic insider trading sentiment is a second way to parse down the financial markets. Obviously, there are plenty of motivations for an insider to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this method if investors understand what to do (learn more here).
Now, let’s take a gander at the latest action regarding The St. Joe Company (NYSE:JOE).
What have hedge funds been doing with The St. Joe Company (NYSE:JOE)?
In preparation for this year, a total of 14 of the hedge funds we track held long positions in this stock, a change of 17% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully.
According to our comprehensive database, Fairholme (FAIRX), managed by Bruce Berkowitz, holds the biggest position in The St. Joe Company (NYSE:JOE). Fairholme (FAIRX) has a $580 million position in the stock, comprising 8.3% of its 13F portfolio. On Fairholme (FAIRX)’s heels is Chuck Royce of Royce & Associates, with a $80 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Bruce Kovner’s Caxton Associates LP, Ken Griffin’s Citadel Investment Group and Jim Simons’s Renaissance Technologies.
Consequently, key money managers have been driving this bullishness. Moore Global Investments, managed by Louis Bacon, established the largest position in The St. Joe Company (NYSE:JOE). Moore Global Investments had 3 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 million investment in the stock during the quarter. The following funds were also among the new JOE investors: Mike Vranos’s Ellington and Cliff Asness’s AQR Capital Management.
What do corporate executives and insiders think about The St. Joe Company (NYSE:JOE)?
Insider buying is best served when the company in question has experienced transactions within the past half-year. Over the latest half-year time frame, The St. Joe Company (NYSE:JOE) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to The St. Joe Company (NYSE:JOE). These stocks are Howard Hughes Corp (NYSE:HHC), Alexander & Baldwin Inc (NYSE:ALEX), American Realty Capital Properties Inc (NASDAQ:ARCP), and Brookfield Residential Properties Inc (NYSE:BRP). All of these stocks are in the real estate development industry and their market caps resemble JOE’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Howard Hughes Corp (NYSE:HHC)||17||0||0|
|Alexander & Baldwin Inc (NYSE:ALEX)||7||0||3|
|American Realty Capital Properties Inc (NASDAQ:ARCP)||1||4||2|
|Brookfield Residential Properties Inc (NYSE:BRP)||9||0||0|
With the returns demonstrated by the aforementioned studies, retail investors should always monitor hedge fund and insider trading sentiment, and The St. Joe Company (NYSE:JOE) is no exception.