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Did Hedge Funds Make The Right Call On Janus Henderson Group plc (JHG) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtJanus Henderson Group plc (NYSE:JHG) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Janus Henderson Group plc (NYSE:JHG) shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. JHG was in 23 hedge funds’ portfolios at the end of March. There were 18 hedge funds in our database with JHG holdings at the end of the previous quarter. Our calculations also showed that JHG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Mario Gabelli of GAMCO Investors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Keeping this in mind we’re going to take a glance at the latest hedge fund action regarding Janus Henderson Group plc (NYSE:JHG).

What have hedge funds been doing with Janus Henderson Group plc (NYSE:JHG)?

At Q1’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 28% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in JHG over the last 18 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

More specifically, Ariel Investments was the largest shareholder of Janus Henderson Group plc (NYSE:JHG), with a stake worth $31.2 million reported as of the end of September. Trailing Ariel Investments was Arrowstreet Capital, which amassed a stake valued at $27.4 million. Fisher Asset Management, Citadel Investment Group, and GAMCO Investors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ariel Investments allocated the biggest weight to Janus Henderson Group plc (NYSE:JHG), around 0.55% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, earmarking 0.35 percent of its 13F equity portfolio to JHG.

As industrywide interest jumped, some big names were breaking ground themselves. D E Shaw, managed by D. E. Shaw, initiated the largest position in Janus Henderson Group plc (NYSE:JHG). D E Shaw had $4.6 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $1.8 million investment in the stock during the quarter. The other funds with brand new JHG positions are Greg Eisner’s Engineers Gate Manager, Peter Muller’s PDT Partners, and Peter Seuss’s Prana Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Janus Henderson Group plc (NYSE:JHG) but similarly valued. We will take a look at nVent Electric plc (NYSE:NVT), Q2 Holdings Inc (NYSE:QTWO), UniFirst Corp (NYSE:UNF), and Watts Water Technologies Inc (NYSE:WTS). This group of stocks’ market values are closest to JHG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NVT 29 453695 1
QTWO 18 217845 -2
UNF 17 75902 -4
WTS 19 237163 0
Average 20.75 246151 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $246 million. That figure was $124 million in JHG’s case. nVent Electric plc (NYSE:NVT) is the most popular stock in this table. On the other hand UniFirst Corp (NYSE:UNF) is the least popular one with only 17 bullish hedge fund positions. Janus Henderson Group plc (NYSE:JHG) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on JHG as the stock returned 43.7% in Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.