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Hedge Funds Have Never Been More Bullish On Jernigan Capital Inc (JCAP)

We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Jernigan Capital Inc (NYSE:JCAP).

Hedge fund interest in Jernigan Capital Inc (NYSE:JCAP) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as EVI Industries, Inc. (NYSE:EVI), CVR Partners LP (NYSE:UAN), and CNB Financial Corporation (NASDAQ:CCNE) to gather more data points. Our calculations also showed that JCAP isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are a multitude of signals stock traders have at their disposal to analyze stocks. Two of the most useful signals are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the best money managers can outclass the broader indices by a healthy margin (see the details here).

JCAP_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a glance at the fresh hedge fund action encompassing Jernigan Capital Inc (NYSE:JCAP).

Hedge fund activity in Jernigan Capital Inc (NYSE:JCAP)

At the end of the second quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the first quarter of 2019. By comparison, 10 hedge funds held shares or bullish call options in JCAP a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

James Dondero Highland Capital Management

Among these funds, Shoals Capital Management held the most valuable stake in Jernigan Capital Inc (NYSE:JCAP), which was worth $11.8 million at the end of the second quarter. On the second spot was Forward Management which amassed $10.9 million worth of shares. Moreover, Highland Capital Management, Ariel Investments, and Millennium Management were also bullish on Jernigan Capital Inc (NYSE:JCAP), allocating a large percentage of their portfolios to this stock.

Judging by the fact that Jernigan Capital Inc (NYSE:JCAP) has experienced bearish sentiment from hedge fund managers, it’s safe to say that there were a few hedgies that decided to sell off their positions entirely heading into Q3. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest stake of the 750 funds monitored by Insider Monkey, comprising about $0.4 million in stock, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital was right behind this move, as the fund sold off about $0 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over 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 EVI Industries, Inc. (NYSE:EVI), CVR Partners LP (NYSE:UAN), CNB Financial Corporation (NASDAQ:CCNE), and Digital Turbine Inc (NASDAQ:APPS). This group of stocks’ market values are similar to JCAP’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EVI 1 2652 0
UAN 4 46491 -1
CCNE 2 27748 -3
APPS 11 17829 -4
Average 4.5 23680 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $40 million in JCAP’s case. Digital Turbine Inc (NASDAQ:APPS) is the most popular stock in this table. On the other hand EVI Industries, Inc. (NYSE:EVI) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Jernigan Capital Inc (NYSE:JCAP) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately JCAP wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on JCAP were disappointed as the stock returned -4.4% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.

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

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