Is Jack Henry & Associates, Inc. (NASDAQ:JKHY) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is JKHY a good stock to buy? Jack Henry & Associates, Inc. (NASDAQ:JKHY) investors should be aware of a decrease in enthusiasm from smart money lately. Jack Henry & Associates, Inc. (NASDAQ:JKHY) was in 30 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 31. There were 31 hedge funds in our database with JKHY holdings at the end of June. Our calculations also showed that JKHY 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.
In the eyes of most shareholders, hedge funds are viewed as slow, outdated financial vehicles of years past. While there are over 8000 funds with their doors open at the moment, Our experts look at the bigwigs of this group, around 850 funds. It is estimated that this group of investors oversee the majority of all hedge funds’ total asset base, and by shadowing their highest performing investments, Insider Monkey has brought to light numerous investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. Now we’re going to take a look at the recent hedge fund action surrounding Jack Henry & Associates, Inc. (NASDAQ:JKHY).
Do Hedge Funds Think JKHY Is A Good Stock To Buy Now?
At the end of September, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -3% from the second quarter of 2020. On the other hand, there were a total of 21 hedge funds with a bullish position in JKHY a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically, Arrowstreet Capital was the largest shareholder of Jack Henry & Associates, Inc. (NASDAQ:JKHY), with a stake worth $91.1 million reported as of the end of September. Trailing Arrowstreet Capital was Echo Street Capital Management, which amassed a stake valued at $51.9 million. Millennium Management, AQR Capital Management, and GLG Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Bishop Rock Capital allocated the biggest weight to Jack Henry & Associates, Inc. (NASDAQ:JKHY), around 5.37% of its 13F portfolio. Prana Capital Management is also relatively very bullish on the stock, designating 1.03 percent of its 13F equity portfolio to JKHY.
Because Jack Henry & Associates, Inc. (NASDAQ:JKHY) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few money managers that slashed their positions entirely last quarter. It’s worth mentioning that Donald Sussman’s Paloma Partners dropped the largest position of the 750 funds tracked by Insider Monkey, worth about $7.2 million in stock, and David Harding’s Winton Capital Management was right behind this move, as the fund said goodbye to about $7.1 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Jack Henry & Associates, Inc. (NASDAQ:JKHY) but similarly valued. We will take a look at SVB Financial Group (NASDAQ:SIVB), PulteGroup, Inc. (NYSE:PHM), PagSeguro Digital Ltd. (NYSE:PAGS), Fair Isaac Corporation (NYSE:FICO), NortonLifeLock Inc. (NASDAQ:NLOK), LINE Corporation (NYSE:LN), and Trimble Inc. (NASDAQ:TRMB). All of these stocks’ market caps are similar to JKHY’s market cap.
|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 30 hedge funds with bullish positions and the average amount invested in these stocks was $840 million. That figure was $352 million in JKHY’s case. PulteGroup, Inc. (NYSE:PHM) is the most popular stock in this table. On the other hand LINE Corporation (NYSE:LN) is the least popular one with only 4 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. Our overall hedge fund sentiment score for JKHY is 66.4. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 33.3% in 2020 through December 18th and surpassed the market again by 16.4 percentage points. Unfortunately JKHY wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); JKHY investors were disappointed as the stock returned -0.3% since the end of September (through 12/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.