Is The St. Joe Company (NYSE:JOE) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
The St. Joe Company (NYSE:JOE) investors should be aware of a decrease in hedge fund interest in recent months. JOE was in 12 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 15 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.
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.
We’re going to take a look at the fresh hedge fund action surrounding The St. Joe Company (NYSE:JOE).
What have hedge funds been doing with The St. Joe Company (NYSE:JOE)?
At the end of the fourth quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in JOE a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Bruce Berkowitz’s Fairholme (FAIRX) has the most valuable position in The St. Joe Company (NYSE:JOE), worth close to $349.6 million, comprising 95.3% of its total 13F portfolio. Coming in second is Mario Gabelli of GAMCO Investors, with a $19.6 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors with similar optimism encompass Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Since The St. Joe Company (NYSE:JOE) has experienced falling interest from the smart money, it’s easy to see that there lies a certain “tier” of money managers that elected to cut their entire stakes last quarter. Interestingly, Thomas E. Claugus’s GMT Capital cut the largest stake of the “upper crust” of funds watched by Insider Monkey, totaling about $3.3 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dropped its stock, about $1.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to The St. Joe Company (NYSE:JOE). We will take a look at Tutor Perini Corp (NYSE:TPC), Career Education Corp. (NASDAQ:CECO), Kelly Services, Inc. (NASDAQ:KELYA), and Associated Capital Group, Inc. (NYSE:AC). This group of stocks’ market values match JOE’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $384 million in JOE’s case. Career Education Corp. (NASDAQ:CECO) is the most popular stock in this table. On the other hand Associated Capital Group, Inc. (NYSE:AC) is the least popular one with only 4 bullish hedge fund positions. The St. Joe Company (NYSE:JOE) is not the most popular stock in this group but hedge fund interest is still above 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. Hedge funds were also right about betting on JOE as the stock returned 29.4% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.