Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on small companies, which makes it hard for an individual investor to pin down a ‘winner’ within the small-cap collection of stocks. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and unlimited resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is Jack Henry & Associates, Inc. (NASDAQ:JKHY) a sound investment now? Money managers are betting on the stock. The number of bullish hedge fund positions advanced by 4 in recent months. Jack Henry & Associates, Inc. (NASDAQ:JKHY) was in 17 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with Jack Henry & Associates, Inc. (NASDAQ:JKHY) holdings at the end of the previous quarter. At the end of this article, we will also compare Jack Henry & Associates, Inc. (NASDAQ:JKHY) to other stocks including DDR Corp (NYSE:DDR), Frontier Communications Corp (NASDAQ:FTR), and CBOE Holdings, Inc (NASDAQ:CBOE) to get a better sense of its popularity.
With all of this in mind, we’re going to take a gander at the new action encompassing Jack Henry & Associates, Inc. (NASDAQ:JKHY).
What does the smart money think about Jack Henry & Associates, Inc. (NASDAQ:JKHY)?
At the end of Q3, a total of 17 of the hedge funds tracked by Insider Monkey were bullish in this stock, an increase of 31% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Royce & Associates, mutual fund managed by Chuck Royce, holds the most valuable position in Jack Henry & Associates, Inc. (NASDAQ:JKHY). Royce & Associates has a $59 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is East Side Capital (RR Partners), led by Steven Richman, holding a $49.9 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism contain Renaissance Technologies, Cliff Asness’ AQR Capital Management and Neil Chriss’ Hutchin Hill Capital.
Consequently, specific money managers were breaking ground themselves. Echo Street Capital Management, managed by Greg Poole, created the largest position in Jack Henry & Associates, Inc. (NASDAQ:JKHY). Echo Street Capital Management had $0.9 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also initiated a $0.7 million position during the quarter. The other funds with new positions in the stock are Michael Platt and William Reeves’ BlueCrest Capital Mgmt., Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and J. Alan Reid, Jr.’s Forward Management.
Let’s now take a look at hedge fund activity in other stocks similar to Jack Henry & Associates, Inc. (NASDAQ:JKHY). We will take a look at DDR Corp (NYSE:DDR), Frontier Communications Corp (NASDAQ:FTR), CBOE Holdings, Inc (NASDAQ:CBOE), and East West Bancorp, Inc. (NASDAQ:EWBC). This group of stocks’ market caps match Jack Henry & Associates, Inc. (NASDAQ:JKHY)’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $360 million. That figure was $160 millions in Jack Henry & Associates, Inc. (NASDAQ:JKHY)’s case. Frontier Communications Corp (NASDAQ:FTR) is the most popular stock in this table. On the other hand, DDR Corp (NYSE:DDR) is the least popular one with only 16 bullish hedge fund positions. Jack Henry & Associates, Inc. (NASDAQ:JKHY) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal despite the number of hedge funds long the stock increasing by four and we’d rather spend our time researching stocks that hedge funds are more interested in. In this regard Frontier Communications Corp (NASDAQ:FTR) might be a better candidate to consider a long position.