The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider Johnson & Johnson (NYSE:JNJ) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is JNJ stock a buy or sell? Johnson & Johnson (NYSE:JNJ) has seen a decrease in hedge fund interest of late. Johnson & Johnson (NYSE:JNJ) was in 81 hedge funds’ portfolios at the end of December. The all time high for this statistic is 94. Our calculations also showed that JNJ isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).
Donald Yacktman of Yacktman Asset Management
At Insider Monkey we leave no stone unturned when looking for 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 10 best cheap stocks to buy now to pick the next Tesla that will deliver a 10x return. 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 homepage (or at the end of this article). Now let’s check out the fresh hedge fund action surrounding Johnson & Johnson (NYSE:JNJ).
Do Hedge Funds Think JNJ Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 81 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -1% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards JNJ over the last 22 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Fundsmith LLP, managed by Terry Smith, holds the most valuable position in Johnson & Johnson (NYSE:JNJ). Fundsmith LLP has a $1.0061 billion position in the stock, comprising 3.3% of its 13F portfolio. On Fundsmith LLP’s heels is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $994 million position; 1.4% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish encompass Cliff Asness’s AQR Capital Management, D. E. Shaw’s D E Shaw and Donald Yacktman’s Yacktman Asset Management. In terms of the portfolio weights assigned to each position Tri Locum Partners allocated the biggest weight to Johnson & Johnson (NYSE:JNJ), around 9.3% of its 13F portfolio. Moab Capital Partners is also relatively very bullish on the stock, designating 6.05 percent of its 13F equity portfolio to JNJ.
Since Johnson & Johnson (NYSE:JNJ) has experienced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there were a few fund managers that elected to cut their entire stakes heading into Q1. Interestingly, Renaissance Technologies said goodbye to the biggest stake of the “upper crust” of funds watched by Insider Monkey, worth an estimated $275.5 million in stock. Michael Castor’s fund, Sio Capital, also sold off its stock, about $17 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 1 funds heading into Q1.
Let’s now take a look at hedge fund activity in other stocks similar to Johnson & Johnson (NYSE:JNJ). We will take a look at Walmart Inc. (NYSE:WMT), JPMorgan Chase & Co. (NYSE:JPM), Mastercard Incorporated (NYSE:MA), The Procter & Gamble Company (NYSE:PG), UnitedHealth Group Inc. (NYSE:UNH), The Walt Disney Company (NYSE:DIS), and NVIDIA Corporation (NASDAQ:NVDA). All of these stocks’ market caps match JNJ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WMT | 70 | 6197019 | 1 |
| JPM | 112 | 6967178 | -6 |
| MA | 154 | 17978734 | 21 |
| PG | 83 | 10421985 | 8 |
| UNH | 91 | 10778450 | 2 |
| DIS | 144 | 16417240 | 32 |
| NVDA | 88 | 8692203 | 6 |
| Average | 106 | 11064687 | 9.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 106 hedge funds with bullish positions and the average amount invested in these stocks was $11065 million. That figure was $5821 million in JNJ’s case. Mastercard Incorporated (NYSE:MA) is the most popular stock in this table. On the other hand Walmart Inc. (NYSE:WMT) is the least popular one with only 70 bullish hedge fund positions. Johnson & Johnson (NYSE:JNJ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for JNJ is 36.4. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7% in 2021 through March 12th and surpassed the market again by 1.6 percentage points. Unfortunately JNJ wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); JNJ investors were disappointed as the stock returned 2% since the end of December (through 3/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
