The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded John Bean Technologies Corporation (NYSE:JBT) based on those filings.
Is JBT a good stock to buy now? John Bean Technologies Corporation (NYSE:JBT) was in 21 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. JBT has experienced an increase in hedge fund interest of late. There were 16 hedge funds in our database with JBT holdings at the end of June. Our calculations also showed that JBT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 66 percentage points since March 2017 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to take a look at the key hedge fund action encompassing John Bean Technologies Corporation (NYSE:JBT).
Do Hedge Funds Think JBT Is A Good Stock To Buy Now?
At the end of September, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from the second quarter of 2020. By comparison, 15 hedge funds held shares or bullish call options in JBT a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in John Bean Technologies Corporation (NYSE:JBT) was held by Royce & Associates, which reported holding $68.3 million worth of stock at the end of September. It was followed by GLG Partners with a $7.4 million position. Other investors bullish on the company included D E Shaw, Citadel Investment Group, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to John Bean Technologies Corporation (NYSE:JBT), around 0.74% of its 13F portfolio. Motley Fool Asset Management is also relatively very bullish on the stock, dishing out 0.24 percent of its 13F equity portfolio to JBT.
Now, key money managers have been driving this bullishness. Gotham Asset Management, managed by Joel Greenblatt, created the most valuable position in John Bean Technologies Corporation (NYSE:JBT). Gotham Asset Management had $1 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $1 million investment in the stock during the quarter. The other funds with brand new JBT positions are Brandon Haley’s Holocene Advisors, Mika Toikka’s AlphaCrest Capital Management, and Donald Sussman’s Paloma Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as John Bean Technologies Corporation (NYSE:JBT) but similarly valued. These stocks are Community Bank System, Inc. (NYSE:CBU), LGI Homes Inc (NASDAQ:LGIH), GW Pharmaceuticals plc (NASDAQ:GWPH), Crane Co. (NYSE:CR), Atlantica Sustainable Infrastructure plc (NASDAQ:AY), Werner Enterprises, Inc. (NASDAQ:WERN), and Lexington Realty Trust (NYSE:LXP). This group of stocks’ market caps match JBT’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $145 million. That figure was $100 million in JBT’s case. Werner Enterprises, Inc. (NASDAQ:WERN) is the most popular stock in this table. On the other hand Community Bank System, Inc. (NYSE:CBU) is the least popular one with only 10 bullish hedge fund positions. John Bean Technologies Corporation (NYSE:JBT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JBT is 65. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on JBT as the stock returned 29% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.