Is JPMorgan Chase & Co. (NYSE:JPM) a healthy stock for your portfolio? The best stock pickers are getting less optimistic. The number of bullish hedge fund positions were cut by 3 in recent months.
If you’d ask most traders, hedge funds are seen as unimportant, old financial tools of years past. While there are over 8000 funds with their doors open at present, we hone in on the masters of this group, close to 450 funds. Most estimates calculate that this group controls the lion’s share of the hedge fund industry’s total capital, and by watching their top investments, we have come up with a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 24 percentage points in 7 months (see the details here).
Just as beneficial, optimistic insider trading activity is another way to break down the world of equities. There are a variety of motivations for an executive to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Several empirical studies have demonstrated the market-beating potential of this strategy if shareholders know what to do (learn more here).
Consequently, we’re going to take a glance at the key action surrounding JPMorgan Chase & Co. (NYSE:JPM).
How have hedgies been trading JPMorgan Chase & Co. (NYSE:JPM)?
At the end of the first quarter, a total of 94 of the hedge funds we track were bullish in this stock, a change of -3% from one quarter earlier. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings substantially.
Of the funds we track, Paul Ruddock and Steve Heinz’s Lansdowne Partners had the most valuable position in JPMorgan Chase & Co. (NYSE:JPM), worth close to $854.1 million, accounting for 11.7% of its total 13F portfolio. The second largest stake is held by Fisher Asset Management, managed by Ken Fisher, which held a $616.7 million position; 1.6% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Phill Gross and Robert Atchinson’s Adage Capital Management, Richard S. Pzena’s Pzena Investment Management and Ric Dillon’s Diamond Hill Capital.
Seeing as JPMorgan Chase & Co. (NYSE:JPM) has faced declining sentiment from the smart money, we can see that there were a few fund managers that slashed their entire stakes last quarter. Intriguingly, Rob Citrone’s Discovery Capital Management cut the biggest stake of all the hedgies we watch, totaling close to $177 million in stock.. George Soros’s fund, Soros Fund Management, also dropped its stock, about $113 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds last quarter.
What have insiders been doing with JPMorgan Chase & Co. (NYSE:JPM)?
Bullish insider trading is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the latest half-year time frame, JPMorgan Chase & Co. (NYSE:JPM) has experienced 2 unique insiders purchasing, and 7 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to JPMorgan Chase & Co. (NYSE:JPM). These stocks are Toronto-Dominion Bank (USA) (NYSE:TD), Mitsubishi UFJ Financial Group Inc (ADR) (NYSE:MTU), Bank of America Corp (NYSE:BAC), Citigroup Inc. (NYSE:C), and Wells Fargo & Co (NYSE:WFC). All of these stocks are in the money center banks industry and their market caps resemble JPM’s market cap.