In this article you are going to find out whether hedge funds think Jabil Inc. (NYSE:JBL) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Jabil Inc. (NYSE:JBL) was in 20 hedge funds’ portfolios at the end of March. JBL investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. There were 34 hedge funds in our database with JBL positions at the end of the previous quarter. Our calculations also showed that JBL 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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. Now we’re going to analyze the new hedge fund action surrounding Jabil Inc. (NYSE:JBL).
Hedge fund activity in Jabil Inc. (NYSE:JBL)
Heading into the second quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -41% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards JBL over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AQR Capital Management was the largest shareholder of Jabil Inc. (NYSE:JBL), with a stake worth $129.5 million reported as of the end of September. Trailing AQR Capital Management was Adage Capital Management, which amassed a stake valued at $40.3 million. Renaissance Technologies, Arrowstreet Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Shellback Capital allocated the biggest weight to Jabil Inc. (NYSE:JBL), around 1.55% of its 13F portfolio. Horseman Capital Management is also relatively very bullish on the stock, earmarking 0.83 percent of its 13F equity portfolio to JBL.
Because Jabil Inc. (NYSE:JBL) has faced declining sentiment from hedge fund managers, logic holds that there is a sect of hedge funds that slashed their entire stakes by the end of the first quarter. Interestingly, Israel Englander’s Millennium Management dropped the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $26 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also said goodbye to its stock, about $4.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 14 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Jabil Inc. (NYSE:JBL) but similarly valued. We will take a look at Ritchie Bros. Auctioneers (NYSE:RBA), GrubHub Inc (NYSE:GRUB), Clearway Energy, Inc. (NYSE:CWEN), and Nomad Foods Limited (NYSE:NOMD). This group of stocks’ market caps are closest to JBL’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $291 million. That figure was $253 million in JBL’s case. Nomad Foods Limited (NYSE:NOMD) is the most popular stock in this table. On the other hand Ritchie Bros. Auctioneers (NYSE:RBA) is the least popular one with only 14 bullish hedge fund positions. Jabil Inc. (NYSE:JBL) is not the least popular stock in this group but hedge fund interest is still below 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 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on JBL as the stock returned 34.1% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.