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

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Juniper Networks, Inc. (NYSE:JNPR).

Juniper Networks, Inc. (NYSE:JNPR) shareholders have witnessed a decrease in enthusiasm from smart money lately. JNPR was in 34 hedge funds’ portfolios at the end of the first quarter of 2020. There were 37 hedge funds in our database with JNPR holdings at the end of the previous quarter. Our calculations also showed that JNPR 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 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 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

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. With all of this in mind we’re going to take a gander at the new hedge fund action regarding Juniper Networks, Inc. (NYSE:JNPR).

What have hedge funds been doing with Juniper Networks, Inc. (NYSE:JNPR)?

Heading into the second quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in JNPR over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is JNPR A Good Stock To Buy?

The largest stake in Juniper Networks, Inc. (NYSE:JNPR) was held by Citadel Investment Group, which reported holding $134.4 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $72.8 million position. Other investors bullish on the company included D E Shaw, Pzena Investment Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Diametric Capital allocated the biggest weight to Juniper Networks, Inc. (NYSE:JNPR), around 1.45% of its 13F portfolio. Levin Easterly Partners is also relatively very bullish on the stock, dishing out 0.54 percent of its 13F equity portfolio to JNPR.

Since Juniper Networks, Inc. (NYSE:JNPR) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there were a few hedgies that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that Steve Cohen’s Point72 Asset Management said goodbye to the biggest position of all the hedgies monitored by Insider Monkey, valued at about $48.1 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also sold off its stock, about $8.3 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 3 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks similar to Juniper Networks, Inc. (NYSE:JNPR). These stocks are LKQ Corporation (NASDAQ:LKQ), Formula One Group (NASDAQ:FWONK), Encompass Health Corporation (NYSE:EHC), and Interpublic Group of Companies Inc (NYSE:IPG). This group of stocks’ market valuations are closest to JNPR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LKQ 41 1132023 -11
FWONK 37 1125200 0
EHC 33 556709 4
IPG 21 594460 -5
Average 33 852098 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $852 million. That figure was $541 million in JNPR’s case. LKQ Corporation (NASDAQ:LKQ) is the most popular stock in this table. On the other hand Interpublic Group of Companies Inc (NYSE:IPG) is the least popular one with only 21 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 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on JNPR as the stock returned 27.8% in Q2 (through the end of May) 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.