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Hedge Funds Warming Up To Jack in the Box Inc. (JACK)

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Jack in the Box Inc. (NASDAQ:JACK) based on that data.

Jack in the Box Inc. (NASDAQ:JACK) has experienced an increase in hedge fund sentiment lately. JACK was in 28 hedge funds’ portfolios at the end of the first quarter of 2020. There were 26 hedge funds in our database with JACK positions at the end of the previous quarter. Our calculations also showed that JACK 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.

To the average investor there are several tools investors employ to appraise stocks. A duo of the most useful tools are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can outpace their index-focused peers by a significant margin (see the details here).

Michael Burry Scion Capital

Michael Burry of Scion Asset Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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 we’re going to take a peek at the new hedge fund action regarding Jack in the Box Inc. (NASDAQ:JACK).

How are hedge funds trading Jack in the Box Inc. (NASDAQ:JACK)?

At the end of the first quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards JACK over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

The largest stake in Jack in the Box Inc. (NASDAQ:JACK) was held by JANA Partners, which reported holding $28.3 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $19.2 million position. Other investors bullish on the company included Balyasny Asset Management, Candlestick Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Scion Asset Management allocated the biggest weight to Jack in the Box Inc. (NASDAQ:JACK), around 12.24% of its 13F portfolio. JANA Partners is also relatively very bullish on the stock, dishing out 3.61 percent of its 13F equity portfolio to JACK.

As industrywide interest jumped, some big names were leading the bulls’ herd. Candlestick Capital Management, managed by Jack Woodruff, created the most valuable position in Jack in the Box Inc. (NASDAQ:JACK). Candlestick Capital Management had $15.8 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also made a $10.7 million investment in the stock during the quarter. The other funds with brand new JACK positions are Michael Burry’s Scion Asset Management, Marc Majzner’s Clearline Capital, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Jack in the Box Inc. (NASDAQ:JACK). We will take a look at Central European Media Enterprises Ltd. (NASDAQ:CETV), Astec Industries, Inc. (NASDAQ:ASTE), Meta Financial Group Inc. (NASDAQ:CASH), and Sandy Spring Bancorp Inc. (NASDAQ:SASR). All of these stocks’ market caps match JACK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CETV 11 36910 1
ASTE 10 95666 1
CASH 13 71021 1
SASR 12 36542 -3
Average 11.5 60035 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $159 million in JACK’s case. Meta Financial Group Inc. (NASDAQ:CASH) is the most popular stock in this table. On the other hand Astec Industries, Inc. (NASDAQ:ASTE) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Jack in the Box Inc. (NASDAQ:JACK) is more popular among hedge funds. 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 returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on JACK as the stock returned 91.2% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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