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J&J Snack Foods Corp. (JJSF): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do?

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J&J Snack Foods Corp. (NASDAQ:JJSF) has experienced a decrease in enthusiasm from smart money in recent months.

In the eyes of most market participants, hedge funds are assumed to be worthless, outdated financial tools of the past. While there are more than 8000 funds trading at present, we look at the aristocrats of this club, close to 450 funds. It is estimated that this group controls the majority of the smart money’s total capital, and by tracking their highest performing stock picks, we have identified a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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 23.3 percentage points in 8 months (explore the details and some picks here).

J&J Snack Foods Corp. (NASDAQ:JJSF)

Equally as important, bullish insider trading activity is another way to break down the financial markets. There are many motivations for an insider to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the market-beating potential of this method if you understand where to look (learn more here).

With these “truths” under our belt, let’s take a gander at the latest action encompassing J&J Snack Foods Corp. (NASDAQ:JJSF).

How are hedge funds trading J&J Snack Foods Corp. (NASDAQ:JJSF)?

In preparation for this quarter, a total of 10 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes considerably.

When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the largest position in J&J Snack Foods Corp. (NASDAQ:JJSF). Royce & Associates has a $52.3 million position in the stock, comprising 0.2% of its 13F portfolio. On Royce & Associates’s heels is Martin Whitman of Third Avenue Management, with a $26.6 million position; 0.5% of its 13F portfolio is allocated to the stock. Remaining hedgies with similar optimism include Jim Simons’s Renaissance Technologies, Mario Gabelli’s GAMCO Investors and Ken Fisher’s Fisher Asset Management.

Judging by the fact that J&J Snack Foods Corp. (NASDAQ:JJSF) has faced bearish sentiment from the smart money, it’s easy to see that there exists a select few fund managers who were dropping their full holdings at the end of the first quarter. Intriguingly, Israel Englander’s Millennium Management dumped the biggest position of all the hedgies we monitor, totaling about $1.2 million in stock., and Joel Greenblatt of Gotham Asset Management was right behind this move, as the fund dumped about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about J&J Snack Foods Corp. (NASDAQ:JJSF)?

Insider trading activity, especially when it’s bullish, is best served when the company we’re looking at has seen transactions within the past six months. Over the latest half-year time frame, J&J Snack Foods Corp. (NASDAQ:JJSF) has seen 1 unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to J&J Snack Foods Corp. (NASDAQ:JJSF). These stocks are The Hain Celestial Group, Inc. (NASDAQ:HAIN), Gruma S.A.B. de C.V. (ADR) (NYSE:GMK), TreeHouse Foods Inc. (NYSE:THS), Snyder S Lance Inc (NASDAQ:LNCE), and B&G Foods, Inc. (NYSE:BGS). This group of stocks are the members of the processed & packaged goods industry and their market caps are closest to JJSF’s market cap.

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