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Should You Avoid Jack Henry & Associates, Inc. (JKHY)?

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Jack Henry & Associates, Inc. (NASDAQ:JKHY) investors should be aware of a decrease in activity from the world’s largest hedge funds lately.

Jack Henry & Associates, Inc. (NASDAQ:JKHY)To most traders, hedge funds are viewed as worthless, outdated financial vehicles of the past. While there are more than 8000 funds trading at present, we at Insider Monkey hone in on the aristocrats of this club, close to 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total capital, and by tracking their best investments, we have determined a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outstripped 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as important, positive insider trading sentiment is another way to break down the financial markets. As the old adage goes: there are a number of reasons for an upper level exec to drop shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the impressive potential of this method if piggybackers understand what to do (learn more here).

Keeping this in mind, let’s take a peek at the key action encompassing Jack Henry & Associates, Inc. (NASDAQ:JKHY).

What have hedge funds been doing with Jack Henry & Associates, Inc. (NASDAQ:JKHY)?

At Q1’s end, a total of 10 of the hedge funds we track held long positions in this stock, a change of -29% from the first quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially.

Of the funds we track, Royce & Associates, managed by Chuck Royce, holds the largest position in Jack Henry & Associates, Inc. (NASDAQ:JKHY). Royce & Associates has a $86.5 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Steven Richman of East Side Capital (RR Partners), with a $34.8 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Jim Simons’s Renaissance Technologies, Ken Griffin’s Citadel Investment Group and Cliff Asness’s AQR Capital Management.

Due to the fact that Jack Henry & Associates, Inc. (NASDAQ:JKHY) has experienced a declination in interest from hedge fund managers, logic holds that there is a sect of money managers that decided to sell off their full holdings heading into Q2. Intriguingly, Matthew Tewksbury’s Stevens Capital Management dropped the biggest investment of the “upper crust” of funds we track, totaling close to $1.3 million in stock., and Neil Chriss of Hutchin Hill Capital was right behind this move, as the fund said goodbye to about $1.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds heading into Q2.

Insider trading activity in Jack Henry & Associates, Inc. (NASDAQ:JKHY)

Bullish insider trading is particularly usable when the primary stock in question has seen transactions within the past six months. Over the last 180-day time frame, Jack Henry & Associates, Inc. (NASDAQ:JKHY) has experienced 1 unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Jack Henry & Associates, Inc. (NASDAQ:JKHY). These stocks are Aspen Technology, Inc. (NASDAQ:AZPN), Tibco Software Inc. (NASDAQ:TIBX), Total System Services, Inc. (NYSE:TSS), Informatica Corporation (NASDAQ:INFA), and Solera Holdings Inc (NYSE:SLH). This group of stocks are the members of the business software & services industry and their market caps resemble JKHY’s market cap.

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