Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by more than 6 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of J. Jill, Inc. (NYSE:JILL).
J. Jill, Inc. (NYSE:JILL) has seen an increase in support from the world’s most elite money managers in recent months. JILL was in 11 hedge funds’ portfolios at the end of March. There were 10 hedge funds in our database with JILL holdings at the end of the previous quarter. Our calculations also showed that JILL isn’t among the 30 most popular stocks among hedge funds.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
Let’s review the latest hedge fund action regarding J. Jill, Inc. (NYSE:JILL).
Hedge fund activity in J. Jill, Inc. (NYSE:JILL)
Heading into the second quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in JILL a year ago. 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, Citadel Investment Group was the largest shareholder of J. Jill, Inc. (NYSE:JILL), with a stake worth $5.1 million reported as of the end of March. Trailing Citadel Investment Group was Buckingham Capital Management, which amassed a stake valued at $4.3 million. Arrowstreet Capital, Renaissance Technologies, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key money managers have been driving this bullishness. North Fourth Asset Management, managed by Anthony Joseph Vaccarino, established the most valuable position in J. Jill, Inc. (NYSE:JILL). North Fourth Asset Management had $1 million invested in the company at the end of the quarter. John Tompkins’s Tyvor Capital also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as J. Jill, Inc. (NYSE:JILL) but similarly valued. We will take a look at resTORbio, Inc. (NASDAQ:TORC), Clipper Realty Inc. (NYSE:CLPR), Value Line, Inc. (NASDAQ:VALU), and Maxar Technologies Inc. (NYSE:MAXR). This group of stocks’ market valuations resemble JILL’s market valuation.
|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 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $19 million in JILL’s case. Maxar Technologies Inc. (NYSE:MAXR) is the most popular stock in this table. On the other hand Value Line, Inc. (NASDAQ:VALU) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks J. Jill, Inc. (NYSE:JILL) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately JILL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on JILL were disappointed as the stock returned -71.8% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.