While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Johnson Outdoors Inc. (NASDAQ:JOUT).
Is JOUT a good stock to buy now? Investors who are in the know were in a bullish mood. The number of long hedge fund bets rose by 2 recently. Johnson Outdoors Inc. (NASDAQ:JOUT) was in 15 hedge funds’ portfolios at the end of September. The all time high for this statistic is 14. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that JOUT 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). There were 13 hedge funds in our database with JOUT positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are perceived as underperforming, outdated financial vehicles of the past. While there are greater than 8000 funds trading at the moment, We look at the bigwigs of this club, approximately 850 funds. Most estimates calculate that this group of people command bulk of all hedge funds’ total capital, and by shadowing their highest performing equity investments, Insider Monkey has come up with several investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum 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 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. With all of this in mind we’re going to review the key hedge fund action surrounding Johnson Outdoors Inc. (NASDAQ:JOUT).
Do Hedge Funds Think JOUT Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in JOUT a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Johnson Outdoors Inc. (NASDAQ:JOUT) was held by Royce & Associates, which reported holding $42.5 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $28.6 million position. Other investors bullish on the company included AQR Capital Management, Manatuck Hill Partners, and Millennium Management. In terms of the portfolio weights assigned to each position Manatuck Hill Partners allocated the biggest weight to Johnson Outdoors Inc. (NASDAQ:JOUT), around 1.48% of its 13F portfolio. StackLine Partners is also relatively very bullish on the stock, designating 0.54 percent of its 13F equity portfolio to JOUT.
Consequently, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the largest position in Johnson Outdoors Inc. (NASDAQ:JOUT). Millennium Management had $1.7 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $0.8 million investment in the stock during the quarter. The only other fund with a brand new JOUT position is Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Johnson Outdoors Inc. (NASDAQ:JOUT) but similarly valued. We will take a look at Granite Construction Incorporated (NYSE:GVA), Archrock, Inc. (NYSE:AROC), Delek US Holdings, Inc. (NYSE:DK), Mobileiron Inc (NASDAQ:MOBL), BellRing Brands, Inc. (NYSE:BRBR), Dillard’s, Inc. (NYSE:DDS), and Green Brick Partners Inc (NASDAQ:GRBK). All of these stocks’ market caps match JOUT’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 14.3 hedge funds with bullish positions and the average amount invested in these stocks was $147 million. That figure was $91 million in JOUT’s case. Mobileiron Inc (NASDAQ:MOBL) is the most popular stock in this table. On the other hand Archrock, Inc. (NYSE:AROC) is the least popular one with only 10 bullish hedge fund positions. Johnson Outdoors Inc. (NASDAQ:JOUT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for JOUT is 53.7. 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 JOUT as the stock returned 20% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.