Hedge Funds Are Nibbling On JBG SMITH Properties (JBGS)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at 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. In this article we look at what those investors think of JBG SMITH Properties (NYSE:JBGS).

JBG SMITH Properties (NYSE:JBGS) was in 20 hedge funds’ portfolios at the end of March. JBGS has seen an increase in hedge fund sentiment lately. There were 19 hedge funds in our database with JBGS holdings at the end of the previous quarter. Our calculations also showed that JBGS 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.

Ric Dillon Diamond Hill Capital

Ric Dillon of Diamond Hill Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a glance at the key hedge fund action surrounding JBG SMITH Properties (NYSE:JBGS).

Hedge fund activity in JBG SMITH Properties (NYSE:JBGS)

At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards JBGS 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 significantly (or already accumulated large positions).

Is JBGS A Good Stock To Buy?

Among these funds, Long Pond Capital held the most valuable stake in JBG SMITH Properties (NYSE:JBGS), which was worth $110.8 million at the end of the third quarter. On the second spot was V3 Capital which amassed $91.5 million worth of shares. Third Avenue Management, Ulysses Management, and Waterfront Capital Partners 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 V3 Capital allocated the biggest weight to JBG SMITH Properties (NYSE:JBGS), around 20.01% of its 13F portfolio. Third Avenue Management is also relatively very bullish on the stock, earmarking 5.8 percent of its 13F equity portfolio to JBGS.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. V3 Capital, managed by Charles Fitzgerald, created the most valuable position in JBG SMITH Properties (NYSE:JBGS). V3 Capital had $91.5 million invested in the company at the end of the quarter. Ric Dillon’s Diamond Hill Capital also initiated a $4.9 million position during the quarter. The following funds were also among the new JBGS investors: Alec Litowitz and Ross Laser’s Magnetar Capital, Israel Englander’s Millennium Management, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks similar to JBG SMITH Properties (NYSE:JBGS). We will take a look at Portland General Electric Company (NYSE:POR), FLIR Systems, Inc. (NASDAQ:FLIR), NewMarket Corporation (NYSE:NEU), and TFS Financial Corporation (NASDAQ:TFSL). This group of stocks’ market caps are closest to JBGS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
POR 23 247138 -4
FLIR 34 193470 2
NEU 20 143254 -2
TFSL 9 134718 -2
Average 21.5 179645 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $319 million in JBGS’s case. FLIR Systems, Inc. (NASDAQ:FLIR) is the most popular stock in this table. On the other hand TFS Financial Corporation (NASDAQ:TFSL) is the least popular one with only 9 bullish hedge fund positions. JBG SMITH Properties (NYSE:JBGS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately JBGS wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); JBGS investors were disappointed as the stock returned -2% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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