Here’s What Hedge Funds Think About Jarden Corp (JAH)

It is widely known that each investor or trader has his/her own strategy of how to trade equities. Some investors tend to trade on news or technical analysis, while others are more inclined to trade on fundamentals, insider trading or a combination of all these approaches. But how do investors shortlist companies amongst the large pool of stocks out there in the market? Some investors tend to create a list of performing stocks, which include stocks reaching new 52-week highs or 52-week lows. This stock selection and investing strategy imply that investors trade stocks in anticipation of higher highs, but it is highly unlikely that this approach will yield consistent above-market returns over the long term. One the other hand, tracking stocks that receive a lot of attention from the hedge fund industry might serve as a more suitable strategy for long term-oriented investors. This basket of stocks does not include only high performing stocks, but also comprises battered stocks ready for turnaround. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on Jarden Corp (NYSE:JAH) in order to identify whether reputable and successful top money managers continue to believe in its potential.

Jarden Corp (NYSE:JAH) has seen an increase in hedge fund sentiment of late. JAH was in 60 hedge funds’ portfolios at the end of December. There were 42 hedge funds in our database with JAH holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as National-Oilwell Varco, Inc. (NYSE:NOV), Lam Research Corporation (NASDAQ:LRCX), and Regions Financial Corporation (NYSE:RF) to gather more data points.

According to most shareholders, hedge funds are seen as underperforming, outdated financial tools of the past. While there are greater than 8000 funds trading today, Our experts hone in on the moguls of this club, about 700 funds. These hedge fund managers control the bulk of the smart money’s total asset base, and by tailing their top investments, Insider Monkey has revealed a number of investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

In December 2015, Jarden Corp (NYSE:JAH) and Newell Rubbermaid Inc. (NYSE:NWL) sealed a merger agreement, under which marketer of consumer and commercial products Newell Rubbermaid will acquire the Jarden in a cash-and-stock deal. Each shareholder of Jarden will receive 0.862 shares of Newell and $21.00 in cash. The shares of Jarden are currently trading at a minor discount to the value of the deal, which values the stock at approximately $54.48. Jarden Corp (NYSE:JAH) is a global consumer products company that offers a wide range of consumer products through three main business segments: Branded Consumables, Consumer Solutions, and Outdoor Solutions. Newell Rubbermaid’s management anticipates cost synergies of $500 million from this acquisition over the next four years, which is expected to close in the second quarter of 2016. Nonetheless, there are a few analysts who believe that the aforementioned multi-billion-dollar merger will result in shareholder value destruction. The low profitability of the two companies relative to other industry peers is one of the reasons why the merger deal might not be successful and lead to shareholder value appreciation.

Now, we’re going to go over the latest action encompassing Jarden Corp (NYSE:JAH).

What have hedge funds been doing with Jarden Corp (NYSE:JAH)?

At Q4’s end, a total of 60 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 43% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Diamond Hill Capital, managed by Ric Dillon, holds the largest position in Jarden Corp (NYSE:JAH). Diamond Hill Capital has a $223.8 million position in the stock, comprising 1.5% of its 13F portfolio. Coming in second is Horizon Asset Management, managed by Murray Stahl, which holds a $175.6 million position; the fund has 3.8% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism consist of Doug Silverman and Alexander Klabin’s Senator Investment Group, Aaron Cowen’s Suvretta Capital Management and Eric Mindich’s Eton Park Capital.

As aggregate interest increased, some big names have jumped into Jarden Corp (NYSE:JAH) headfirst. Suvretta Capital Management, managed by Aaron Cowen, established the largest position in Jarden Corp (NYSE:JAH). Suvretta Capital Management had $142 million invested in the company at the end of the quarter. Eric Mindich’s Eton Park Capital also made a $131.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Thomas Steyer’s Farallon Capital, Lee Ainslie’s Maverick Capital, and Shane Finemore’s Manikay Partners.

The third page of this article reveals the hedge fund activity in several companies that have market caps similar to the one of Jarden.

Let’s now take a look at hedge fund activity in other stocks similar to Jarden Corp (NYSE:JAH). We will take a look at National-Oilwell Varco, Inc. (NYSE:NOV), Lam Research Corporation (NASDAQ:LRCX), Regions Financial Corporation (NYSE:RF), and CA, Inc. (NASDAQ:CA). All of these stocks’ market caps resemble JAH’s market cap.

As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $1.16 billion, lower than the $2.45 billion in JAH’s case. Lam Research Corporation (NASDAQ:LRCX) is the most popular stock in this table. On the other hand CA, Inc. (NASDAQ:CA) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Jarden Corp (NYSE:JAH) is more popular among hedge funds.

Disclosure: None