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Hedge Funds Are Selling Juniper Networks, Inc. (JNPR)

While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Juniper Networks, Inc. (NYSE:JNPR).

Juniper Networks, Inc. (NYSE:JNPR) investors should be aware of a decrease in hedge fund sentiment of late. Our calculations also showed that JNPR isn’t among the 30 most popular stocks among hedge funds.

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 flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

AQR CAPITAL MANAGEMENT

We’re going to take a peek at the fresh hedge fund action surrounding Juniper Networks, Inc. (NYSE:JNPR).

How have hedgies been trading Juniper Networks, Inc. (NYSE:JNPR)?

At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from one quarter earlier. By comparison, 27 hedge funds held shares or bullish call options in JNPR heading into this year. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

JNPR_dec2018

The largest stake in Juniper Networks, Inc. (NYSE:JNPR) was held by AQR Capital Management, which reported holding $164.6 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $111.8 million position. Other investors bullish on the company included Citadel Investment Group, Diamond Hill Capital, and Alyeska Investment Group.

Since Juniper Networks, Inc. (NYSE:JNPR) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there exists a select few funds that elected to cut their positions entirely last quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the biggest investment of the 700 funds monitored by Insider Monkey, comprising an estimated $7.8 million in stock. Isaac Corre’s fund, Governors Lane, also said goodbye to its stock, about $4.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to Juniper Networks, Inc. (NYSE:JNPR). These stocks are Athene Holding Ltd. (NYSE:ATH), Fibria Celulose SA (NYSE:FBR), Varian Medical Systems, Inc. (NYSE:VAR), and Michael Kors Holdings Ltd (NYSE:KORS). This group of stocks’ market values are similar to JNPR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ATH 42 1775251 6
FBR 6 179071 -1
VAR 19 576016 -5
KORS 47 1555977 12
Average 28.5 1021579 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.02 billion. That figure was $693 million in JNPR’s case. Michael Kors Holdings Ltd (NYSE:KORS) is the most popular stock in this table. On the other hand Fibria Celulose SA (NYSE:FBR) is the least popular one with only 6 bullish hedge fund positions. Juniper Networks, Inc. (NYSE:JNPR) 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. In this regard KORS might be a better candidate to consider a long position.

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

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