Is Jarden Corp (JAH) A Good Stock To Buy Right Now?

Hedge funds and institutional investors are bullish on Jarden.  Three of Jarden’s top five fund stock holders increased their positions in the first quarter. Larry Robbins’ Glenview Capital, Ric Dillon’s Diamond Hill Capital, and Ken Griffin’s Citadel Investment Group all increased their positions from January to March 31. Doug Silverman’s Senator Investment Group kept its position the same while Murray Stahl’s Horizon Asset Management modestly reduced its position by 5%.

We mention the hedge fund holders of Jarden because following hedge fund activity can generate alpha. Our research shows that the 15 most popular small-cap stocks among hedge funds have outperformed the market by nearly a percentage point per month between 1999 and 2012. We have been forward testing the performance of these stock picks since the end of August 2012, and they managed to return more than 144% over the ensuing 2.5+ years and outperformed the S&P 500 Index by over 84 percentage points (read the details here).

Jarden Corp (NYSE:JAH) is undervalued versus its peers. With a forward PE of 17.8, Jarden’s forward PE is lower than the S&P 500’s forward PE of 18 and P&G’s forward PE of 19.66 even though Jarden’s next 5 year EPS growth rate is higher than P&G’s next 5 year growth rate. If management delivers on its target of adjusted EPS of $4 by 2018, we see Jarden shares trading around $80-$88 per share by 2018.

Disclosure: None