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Here’s What Hedge Funds Think About JBG SMITH Properties (JBGS)

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in fourth quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with technology among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about JBG SMITH Properties (NYSE:JBGS) in this article.

JBG SMITH Properties (NYSE:JBGS) shareholders have witnessed an increase in hedge fund sentiment lately. JBGS was in 20 hedge funds’ portfolios at the end of December. There were 17 hedge funds in our database with JBGS holdings at the end of the previous quarter. Our calculations also showed that JBGS 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 32 percentage points since May 2014 through March 12, 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.

Millennium Management, Catapult Capital Management

We’re going to take a look at the key hedge fund action regarding JBG SMITH Properties (NYSE:JBGS).

How have hedgies been trading JBG SMITH Properties (NYSE:JBGS)?

Heading into the first quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the second quarter of 2018. On the other hand, there were a total of 20 hedge funds with a bullish position in JBGS a year ago. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

JBGS_apr2019

Among these funds, Sessa Capital held the most valuable stake in JBG SMITH Properties (NYSE:JBGS), which was worth $81 million at the end of the third quarter. On the second spot was Long Pond Capital which amassed $73.3 million worth of shares. Moreover, Renaissance Technologies, Ulysses Management, and Waterfront Capital Partners were also bullish on JBG SMITH Properties (NYSE:JBGS), allocating a large percentage of their portfolios to this stock.

Now, key money managers have jumped into JBG SMITH Properties (NYSE:JBGS) headfirst. One Tusk Investment Partners, managed by Vivian Lau, initiated the most outsized position in JBG SMITH Properties (NYSE:JBGS). One Tusk Investment Partners had $5.2 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $1.9 million investment in the stock during the quarter. The following funds were also among the new JBGS investors: Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group, and Andre F. Perold’s HighVista Strategies.

Let’s go over hedge fund activity in other stocks similar to JBG SMITH Properties (NYSE:JBGS). We will take a look at The Howard Hughes Corporation (NYSE:HHC), Primerica, Inc. (NYSE:PRI), Green Dot Corporation (NYSE:GDOT), and Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI). All of these stocks’ market caps are similar to JBGS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HHC 26 476406 7
PRI 16 271268 4
GDOT 19 266170 -1
OLLI 24 199733 7
Average 21.25 303394 4.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $303 million. That figure was $272 million in JBGS’s case. The Howard Hughes Corporation (NYSE:HHC) is the most popular stock in this table. On the other hand Primerica, Inc. (NYSE:PRI) is the least popular one with only 16 bullish hedge fund positions. JBG SMITH Properties (NYSE:JBGS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on JBGS, though not to the same extent, as the stock returned 19.1% and outperformed the market as well.

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

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