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Here’s What Hedge Funds Think About SJW Group (SJW)

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 15 S&P 500 stocks among hedge funds at the end of September 2018 returned an average of 1% through March 15th whereas the S&P 500 Index ETF lost 2.2% during the same period. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at SJW Group (NYSE:SJW) from the perspective of those elite funds.

SJW Group (NYSE:SJW) investors should pay attention to an increase in enthusiasm from smart money lately. Our calculations also showed that SJW 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’ 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 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Chuck Royce

We’re going to review the fresh hedge fund action regarding SJW Group (NYSE:SJW).

What does the smart money think about SJW Group (NYSE:SJW)?

At the end of the fourth quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 82% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in SJW 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.

SJW_apr2019

Among these funds, Renaissance Technologies held the most valuable stake in SJW Group (NYSE:SJW), which was worth $42.5 million at the end of the fourth quarter. On the second spot was Point72 Asset Management which amassed $25.9 million worth of shares. Moreover, Royce & Associates, Blackstart Capital, and Shelter Harbor Advisors were also bullish on SJW Group (NYSE:SJW), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, key money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, established the biggest position in SJW Group (NYSE:SJW). Point72 Asset Management had $25.9 million invested in the company at the end of the quarter. Brian Olson, Baehyun Sung, and Jamie Waters’s Blackstart Capital also initiated a $16.9 million position during the quarter. The other funds with brand new SJW positions are Peter J. Hark’s Shelter Harbor Advisors, Benjamin A. Smith’s Laurion Capital Management, and Steve Pattyn’s Yaupon Capital.

Let’s also examine hedge fund activity in other stocks similar to SJW Group (NYSE:SJW). These stocks are Verra Mobility Corporation (NASDAQ:VRRM), Flagstar Bancorp Inc (NYSE:FBC), Vicor Corp (NASDAQ:VICR), and Euronav NV (NYSE:EURN). This group of stocks’ market valuations resemble SJW’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VRRM 13 132441 -4
FBC 12 106657 -3
VICR 15 48779 -1
EURN 11 130449 -5
Average 12.75 104582 -3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $176 million in SJW’s case. Vicor Corp (NASDAQ:VICR) is the most popular stock in this table. On the other hand Euronav NV (NYSE:EURN) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks SJW Group (NYSE:SJW) is more popular among hedge funds. 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. Unfortunately SJW wasn’t nearly as popular as these 15 stock and hedge funds that were betting on SJW were disappointed as the stock returned 9.5% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

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