Hedge Funds Souring On Jianpu Technology Inc. (JT)

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 Jianpu Technology Inc. (NYSE:JT).

Is Jianpu Technology Inc. (NYSE:JT) an excellent investment now? The smart money is becoming less confident. The number of long hedge fund positions decreased by 2 in recent months. Our calculations also showed that JT 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.

Ken Griffin

Ken Griffin of Citadel Investment Group

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 stocks recommended/dissed by legendary Bill Miller. 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. Keeping this in mind let’s take a peek at the fresh hedge fund action surrounding Jianpu Technology Inc. (NYSE:JT).

How have hedgies been trading Jianpu Technology Inc. (NYSE:JT)?

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in JT 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.

When looking at the institutional investors followed by Insider Monkey, Jonathan Guo’s Yiheng Capital has the biggest position in Jianpu Technology Inc. (NYSE:JT), worth close to $1.4 million, comprising 0.1% of its total 13F portfolio. The second most bullish fund is Renaissance Technologies, which holds a $1.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions include Ken Griffin’s Citadel Investment Group, Mark Wolfson and Jamie Alexander’s Jasper Ridge Partners and . In terms of the portfolio weights assigned to each position Yiheng Capital allocated the biggest weight to Jianpu Technology Inc. (NYSE:JT), around 0.11% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.0012 percent of its 13F equity portfolio to JT.

Judging by the fact that Jianpu Technology Inc. (NYSE:JT) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there is a sect of funds who were dropping their positions entirely in the third quarter. At the top of the heap, Israel Englander’s Millennium Management dropped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, valued at an estimated $0.1 million in stock, and Jeffrey Diehl’s Adams Street Partners was right behind this move, as the fund said goodbye to about $0 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Jianpu Technology Inc. (NYSE:JT). We will take a look at IVERIC bio, Inc. (NASDAQ:ISEE), Stellus Capital Investment Corporation (NYSE:SCM), Eagle Bulk Shipping Inc. (NASDAQ:EGLE), and Empresa Distribuidora y Comercializadora Norte Sociedad Anonima (NYSE:EDN). This group of stocks’ market values resemble JT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ISEE 23 74017 1
SCM 2 2253 0
EGLE 8 85844 -4
EDN 2 73 -3
Average 8.75 40547 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $3 million in JT’s case. IVERIC bio, Inc. (NASDAQ:ISEE) is the most popular stock in this table. On the other hand Stellus Capital Investment Corporation (NYSE:SCM) is the least popular one with only 2 bullish hedge fund positions. Jianpu Technology Inc. (NYSE:JT) 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately JT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); JT investors were disappointed as the stock returned -24% 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.