Here is What Hedge Funds Think About The St. Joe Company (JOE)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of The St. Joe Company (NYSE:JOE) based on that data and determine whether they were really smart about the stock.

The St. Joe Company (NYSE:JOE) has experienced an increase in support from the world’s most elite money managers of late. JOE was in 11 hedge funds’ portfolios at the end of the first quarter of 2020. There were 10 hedge funds in our database with JOE holdings at the end of the previous quarter. Our calculations also showed that JOE 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

FAIRHOLME (FAIRX) Bruce Berkowitz

Bruce Berkowitz of Fairholme (FAIRX)

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a peek at the latest hedge fund action encompassing The St. Joe Company (NYSE:JOE).

What have hedge funds been doing with The St. Joe Company (NYSE:JOE)?

At the end of the first quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in JOE a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

More specifically, Fairholme (FAIRX) was the largest shareholder of The St. Joe Company (NYSE:JOE), with a stake worth $444.9 million reported as of the end of September. Trailing Fairholme (FAIRX) was GAMCO Investors, which amassed a stake valued at $24.1 million. Royce & Associates, Renaissance Technologies, and GMT 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 Fairholme (FAIRX) allocated the biggest weight to The St. Joe Company (NYSE:JOE), around 87.23% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, earmarking 0.28 percent of its 13F equity portfolio to JOE.

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, created the biggest position in The St. Joe Company (NYSE:JOE). Millennium Management had $1.5 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $0.4 million position during the quarter. The only other fund with a brand new JOE position is Benjamin A. Smith’s Laurion Capital Management.

Let’s check out hedge fund activity in other stocks similar to The St. Joe Company (NYSE:JOE). We will take a look at The Liberty Braves Group (NASDAQ:BATRA), CNX Resources Corporation (NYSE:CNX), Broadmark Realty Capital Inc. (NYSE:BRMK), and Eagle Bancorp, Inc. (NASDAQ:EGBN). This group of stocks’ market caps are similar to JOE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BATRA 11 55016 1
CNX 24 331831 6
BRMK 15 93964 -2
EGBN 12 12086 -6
Average 15.5 123224 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $123 million. That figure was $491 million in JOE’s case. CNX Resources Corporation (NYSE:CNX) is the most popular stock in this table. On the other hand The Liberty Braves Group (NASDAQ:BATRA) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks The St. Joe Company (NYSE:JOE) is even less popular than BATRA. Hedge funds dodged a bullet by taking a bearish stance towards JOE. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but managed to beat the market by 15.5 percentage points. Unfortunately JOE wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); JOE investors were disappointed as the stock returned 15.7% 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 so far in 2020.

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