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Hedge Funds Are Falling Out Of Love With Jernigan Capital Inc (JCAP)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Jernigan Capital Inc (NYSE:JCAP).

Jernigan Capital Inc (NYSE:JCAP) has experienced a decrease in hedge fund sentiment in recent months. Our calculations also showed that JCAP 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.

In the eyes of most shareholders, hedge funds are assumed to be worthless, outdated financial vehicles of the past. While there are over 8000 funds in operation at present, Our experts choose to focus on the elite of this group, around 850 funds. Most estimates calculate that this group of people administer bulk of all hedge funds’ total capital, and by following their matchless equity investments, Insider Monkey has determined a few investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

James Dondero Highland Capital Management

James Dondero of Highland Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to go over the new hedge fund action regarding Jernigan Capital Inc (NYSE:JCAP).

How have hedgies been trading Jernigan Capital Inc (NYSE:JCAP)?

At the end of the first quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards JCAP over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Among these funds, Shoals Capital Management held the most valuable stake in Jernigan Capital Inc (NYSE:JCAP), which was worth $9.8 million at the end of the third quarter. On the second spot was Forward Management which amassed $5.9 million worth of shares. Winton Capital Management, Highland Capital Management, and Ariel Investments 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 Shoals Capital Management allocated the biggest weight to Jernigan Capital Inc (NYSE:JCAP), around 45.56% of its 13F portfolio. Forward Management is also relatively very bullish on the stock, designating 1.14 percent of its 13F equity portfolio to JCAP.

Because Jernigan Capital Inc (NYSE:JCAP) has witnessed a decline in interest from hedge fund managers, logic holds that there lies a certain “tier” of hedge funds that decided to sell off their positions entirely in the first quarter. It’s worth mentioning that Michael Gelband’s ExodusPoint Capital sold off the largest position of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $0.3 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund cut about $0.2 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 2 funds in the first quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Jernigan Capital Inc (NYSE:JCAP) but similarly valued. We will take a look at Nathan’s Famous, Inc. (NASDAQ:NATH), Oil-Dri Corporation of America (NYSE:ODC), Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI), and Landec Corporation (NASDAQ:LNDC). This group of stocks’ market caps are similar to JCAP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NATH 5 31054 0
ODC 4 30530 1
ACBI 14 37356 0
LNDC 15 58125 3
Average 9.5 39266 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $23 million in JCAP’s case. Landec Corporation (NASDAQ:LNDC) is the most popular stock in this table. On the other hand Oil-Dri Corporation of America (NYSE:ODC) is the least popular one with only 4 bullish hedge fund positions. Jernigan Capital Inc (NYSE:JCAP) is not the least popular stock in this group but hedge fund interest is still below 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 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on JCAP, though not to the same extent, as the stock returned 24.5% during the second quarter and outperformed the market.

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