Hedge Funds Are Cashing Out Of Juniper Networks, Inc. (JNPR)

In this article we are going to use hedge fund sentiment as a tool and determine whether Juniper Networks, Inc. (NYSE:JNPR) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is Juniper Networks, Inc. (NYSE:JNPR) an outstanding investment now? Money managers were taking a pessimistic view. The number of long hedge fund bets retreated by 2 recently. Juniper Networks, Inc. (NYSE:JNPR) was in 29 hedge funds’ portfolios at the end of March. The all time high for this statistic is 41. Our calculations also showed that JNPR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 31 hedge funds in our database with JNPR holdings at the end of December.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to view the recent hedge fund action surrounding Juniper Networks, Inc. (NYSE:JNPR).

Do Hedge Funds Think JNPR Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards JNPR over the last 23 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

Is JNPR A Good Stock To Buy?

More specifically, Pzena Investment Management was the largest shareholder of Juniper Networks, Inc. (NYSE:JNPR), with a stake worth $73.1 million reported as of the end of March. Trailing Pzena Investment Management was Arrowstreet Capital, which amassed a stake valued at $49.9 million. Millennium Management, Renaissance Technologies, and Diamond Hill Capital 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 Fairpointe Capital allocated the biggest weight to Juniper Networks, Inc. (NYSE:JNPR), around 0.75% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, dishing out 0.63 percent of its 13F equity portfolio to JNPR.

Judging by the fact that Juniper Networks, Inc. (NYSE:JNPR) has witnessed declining sentiment from hedge fund managers, logic holds that there were a few hedgies that slashed their positions entirely by the end of the first quarter. It’s worth mentioning that Mikal Patel’s Oribel Capital Management sold off the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $4.7 million in stock. Brandon Haley’s fund, Holocene Advisors, also sold off its stock, about $3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the first quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Juniper Networks, Inc. (NYSE:JNPR) but similarly valued. These stocks are Gerdau SA (NYSE:GGB), Huntington Ingalls Industries Inc (NYSE:HII), Santander Consumer USA Holdings Inc (NYSE:SC), Arrow Electronics, Inc. (NYSE:ARW), Lightspeed POS Inc. (NYSE:LSPD), Berry Global Group Inc (NYSE:BERY), and Globant SA (NYSE:GLOB). All of these stocks’ market caps are similar to JNPR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GGB 11 224795 -4
HII 20 277613 -1
SC 23 309023 2
ARW 23 767932 -4
LSPD 21 643714 1
BERY 42 1404006 8
GLOB 17 323406 2
Average 22.4 564356 0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.4 hedge funds with bullish positions and the average amount invested in these stocks was $564 million. That figure was $317 million in JNPR’s case. Berry Global Group Inc (NYSE:BERY) is the most popular stock in this table. On the other hand Gerdau SA (NYSE:GGB) is the least popular one with only 11 bullish hedge fund positions. Juniper Networks, Inc. (NYSE:JNPR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JNPR is 53.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately JNPR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on JNPR were disappointed as the stock returned 8.7% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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