Is it smart to be bullish on Jack in the Box Inc. (NASDAQ:JACK)?
If you were to ask many investors, hedge funds are seen as overrated, old investment vehicles of a period lost to current times. Although there are more than 8,000 hedge funds in operation today, this site aim at the masters of this group, close to 525 funds. Analysts calculate that this group oversees the lion's share of all hedge funds' total assets, and by monitoring their highest performing picks, we've uncovered a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year 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 outclassed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as key, positive insider trading sentiment is another way to analyze the marketplace. Obviously, there are many stimuli for an upper level exec to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this strategy if shareholders know where to look (learn more here).
Thus, it's important to analyze the latest info for Jack in the Box Inc. (NASDAQ:JACK).
At the end of the second quarter, a total of 20 of the hedge funds we track were long in this stock, a change of -5% from the first quarter. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes substantially.
According to our 13F database, Clifton S. Robbins's Blue Harbour Group had the biggest position in Jack in the Box Inc. (NASDAQ:JACK), worth close to $59.4 million, comprising 4.5% of its total 13F portfolio. The second largest stake is held by Glenhill Advisors, managed by Glenn J. Krevlin, which held a $16.8 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Some other peers that are bullish include Joshua Friedman and Mitchell Julis's Canyon Capital Advisors, Ken Griffin's Citadel Investment Group and Michael Doheny's Freshford Capital Management.
Because Jack in the Box Inc. (NASDAQ:JACK) has faced dropping sentiment from the smart money's best and brightest, logic holds that there exists a select few funds who were dropping their full holdings last quarter. Intriguingly, Paul Marshall and Ian Wace's Marshall Wace LLP sold off the biggest stake of the "upper crust" of funds we key on, worth about $6.1 million in stock, and Neil Chriss of Hutchin Hill Capital was right behind this move, as the fund sold off about $2.1 million worth. These moves are important to note, as total hedge fund interest dropped by 1 funds last quarter.
Legal insider trading, particularly when it's bullish, is best served when the company in focus has seen transactions within the past half-year. Over the last six-month time period, Jack in the Box Inc. (NASDAQ:JACK) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators in other stocks similar to Jack in the Box Inc. (NASDAQ:JACK). These stocks are Bob Evans Farms Inc (NASDAQ:BOBE), DineEquity Inc (NYSE:DIN), Buffalo Wild Wings (NASDAQ:BWLD), Papa John's Int'l, Inc. (NASDAQ:PZZA), and Texas Roadhouse Inc (NASDAQ:TXRH). This group of stocks belong to the restaurants industry and their market caps match JACK's market cap.