It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 18.7% so far in 2019 and outperformed the S&P 500 ETF by 6.6 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards SJW Group (NYSE:SJW) changed during the first quarter.
Is SJW Group (NYSE:SJW) a buy here? Hedge funds are taking a pessimistic view. The number of long hedge fund positions went down by 5 lately. Our calculations also showed that sjw isn’t among the 30 most popular stocks among hedge funds.
According to most stock holders, hedge funds are assumed to be worthless, old investment tools of yesteryear. While there are more than 8000 funds in operation today, We choose to focus on the aristocrats of this group, approximately 750 funds. These investment experts watch over the lion’s share of the smart money’s total capital, and by tailing their highest performing equity investments, Insider Monkey has figured out several investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
We’re going to check out the fresh hedge fund action encompassing SJW Group (NYSE:SJW).
Hedge fund activity in SJW Group (NYSE:SJW)
At Q1’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in SJW a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of SJW Group (NYSE:SJW), with a stake worth $52.2 million reported as of the end of March. Trailing Renaissance Technologies was Point72 Asset Management, which amassed a stake valued at $22.8 million. Royce & Associates, Blackstart Capital, and Shelter Harbor Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as SJW Group (NYSE:SJW) has witnessed declining sentiment from hedge fund managers, it’s easy to see that there was a specific group of fund managers that decided to sell off their entire stakes in the third quarter. Intriguingly, Benjamin A. Smith’s Laurion Capital Management dumped the biggest investment of all the hedgies followed by Insider Monkey, worth an estimated $8 million in stock, and Steve Pattyn’s Yaupon Capital was right behind this move, as the fund dropped about $4.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 5 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as SJW Group (NYSE:SJW) but similarly valued. We will take a look at Tower Semiconductor Ltd. (NASDAQ:TSEM), Cannae Holdings, Inc. (NYSE:CNNE), Cubic Corporation (NYSE:CUB), and Sotheby’s (NYSE:BID). This group of stocks’ market caps are similar to SJW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSEM | 12 | 258420 | -4 |
| CNNE | 24 | 256097 | 1 |
| CUB | 15 | 72613 | -7 |
| BID | 18 | 335777 | 2 |
| Average | 17.25 | 230727 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $173 million in SJW’s case. Cannae Holdings, Inc. (NYSE:CNNE) is the most popular stock in this table. On the other hand Tower Semiconductor Ltd. (NASDAQ:TSEM) is the least popular one with only 12 bullish hedge fund positions. SJW Group (NYSE:SJW) is not the least popular stock in this group but hedge fund interest is still below average. 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately SJW wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SJW investors were disappointed as the stock returned -0.5% 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
