While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Janus Henderson Group plc (NYSE:JHG).
Janus Henderson Group plc (NYSE:JHG) was in 14 hedge funds’ portfolios at the end of the third quarter of 2019. JHG has experienced a decrease in hedge fund interest of late. There were 15 hedge funds in our database with JHG positions at the end of the previous quarter. Our calculations also showed that JHG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ken Fisher of Fisher Asset Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the recent hedge fund action surrounding Janus Henderson Group plc (NYSE:JHG).
How are hedge funds trading Janus Henderson Group plc (NYSE:JHG)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in JHG over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, Ariel Investments was the largest shareholder of Janus Henderson Group plc (NYSE:JHG), with a stake worth $45.2 million reported as of the end of September. Trailing Ariel Investments was Fisher Asset Management, which amassed a stake valued at $30.3 million. Renaissance Technologies, Arrowstreet Capital, and Samlyn Capital 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 Ariel Investments allocated the biggest weight to Janus Henderson Group plc (NYSE:JHG), around 0.6% of its 13F portfolio. Samlyn Capital is also relatively very bullish on the stock, earmarking 0.35 percent of its 13F equity portfolio to JHG.
Since Janus Henderson Group plc (NYSE:JHG) has faced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedge funds that decided to sell off their entire stakes heading into Q4. At the top of the heap, David E. Shaw’s D E Shaw dropped the largest position of the 750 funds tracked by Insider Monkey, valued at an estimated $4.2 million in stock. Peter Seuss’s fund, Prana Capital Management, also cut its stock, about $2.2 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Janus Henderson Group plc (NYSE:JHG). These stocks are Affiliated Managers Group, Inc. (NYSE:AMG), Amedisys Inc (NASDAQ:AMED), Ryman Hospitality Properties, Inc. (NYSE:RHP), and Smartsheet Inc. (NYSE:SMAR). All of these stocks’ market caps match JHG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMG | 20 | 446109 | 0 |
| AMED | 21 | 197534 | -3 |
| RHP | 20 | 397632 | -1 |
| SMAR | 45 | 1213839 | -1 |
| Average | 26.5 | 563779 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $564 million. That figure was $183 million in JHG’s case. Smartsheet Inc. (NYSE:SMAR) is the most popular stock in this table. On the other hand Affiliated Managers Group, Inc. (NYSE:AMG) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Janus Henderson Group plc (NYSE:JHG) is even less popular than AMG. Hedge funds clearly dropped the ball on JHG as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on JHG as the stock returned 14.8% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
