Is JPMorgan Chase & Co. (NYSE:JPM) a good stock to buy right now? We know coronavirus is probably the #1 concern in your mind right now. It should be. We estimate that COVID-19 will kill around 5 million people worldwide and there is actually a 3.3% probability that president Donald Trump will die from the new coronavirus (see the details). Coronavirus will probably cause a short recession and then things will get back to business as usual. That’s why we believe you should use this opportunity to identify the best stocks to invest for the future and add them to your portfolio at increasingly attractive prices. How do we find high quality stocks? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
JPMorgan Chase & Co. (NYSE:JPM) shareholders have witnessed an increase in enthusiasm from smart money of late. JPM was in 98 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 94 hedge funds in our database with JPM holdings at the end of the previous quarter. Our calculations also showed that JPM ranked 19th among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
We leave no stone unturned when looking for the next great investment idea. For example this gold mining company is acquiring gold mines in Americas at a fraction of the cost of drilling them, so we look into its viability. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned nearly 50% despite the large losses in the market since our recommendation. Keeping this in mind let’s take a gander at the latest hedge fund action surrounding JPMorgan Chase & Co. (NYSE:JPM).
What does smart money think about JPMorgan Chase & Co. (NYSE:JPM)?
At Q4’s end, a total of 98 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. On the other hand, there were a total of 101 hedge funds with a bullish position in JPM a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in JPMorgan Chase & Co. (NYSE:JPM) was held by Berkshire Hathaway, which reported holding $8296.4 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $830.7 million position. Other investors bullish on the company included Citadel Investment Group, Adage Capital Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Brave Warrior Capital allocated the biggest weight to JPMorgan Chase & Co. (NYSE:JPM), around 13.56% of its 13F portfolio. Hi-Line Capital Management is also relatively very bullish on the stock, setting aside 8 percent of its 13F equity portfolio to JPM.
With a general bullishness amongst the heavyweights, key money managers have jumped into JPMorgan Chase & Co. (NYSE:JPM) headfirst. Steadfast Capital Management, managed by Robert Pitts, established the biggest position in JPMorgan Chase & Co. (NYSE:JPM). Steadfast Capital Management had $240.2 million invested in the company at the end of the quarter. Stanley Druckenmiller’s Duquesne Capital also made a $179.4 million investment in the stock during the quarter. The following funds were also among the new JPM investors: Ray Dalio’s Bridgewater Associates, Zach Schreiber’s Point State Capital, and Israel Englander’s Millennium Management.
Let’s also examine hedge fund activity in other stocks similar to JPMorgan Chase & Co. (NYSE:JPM). These stocks are Visa Inc (NYSE:V), Johnson & Johnson (NYSE:JNJ), Walmart Inc. (NYSE:WMT), and Bank of America Corporation (NYSE:BAC). All of these stocks’ market caps are similar to JPM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| V | 143 | 16812443 | -4 |
| JNJ | 85 | 8257996 | 1 |
| WMT | 52 | 5252501 | -6 |
| BAC | 99 | 38412092 | -4 |
| Average | 94.75 | 17183758 | -3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 94.75 hedge funds with bullish positions and the average amount invested in these stocks was $17184 million. That figure was $13134 million in JPM’s case. Visa Inc (NYSE:V) is the most popular stock in this table. On the other hand Walmart Inc. (NYSE:WMT) is the least popular one with only 52 bullish hedge fund positions. JPMorgan Chase & Co. (NYSE:JPM) is not the most popular stock in this group but hedge fund interest is still above average. 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 10.1 percentage points. These stocks also gained 0.1% in 2020 through March 2nd and beat the market by 4.1 percentage points. Unfortunately JPM wasn’t nearly as successful as these 20 stocks and hedge funds that were betting on JPM were disappointed as the stock returned -12.3% during the same time period 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
