Is The J.M. Smucker Company (SJM) Going to Burn These Hedge Funds?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded The J.M. Smucker Company (NYSE:SJM) based on those filings.

Is The J.M. Smucker Company (NYSE:SJM) a buy right now? The smart money is betting on the stock. The number of bullish hedge fund positions increased by 5 in recent months. Our calculations also showed that SJM isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

According to most stock holders, hedge funds are seen as worthless, outdated investment vehicles of years past. While there are over 8000 funds trading today, We look at the top tier of this group, approximately 850 funds. These hedge fund managers watch over the lion’s share of the smart money’s total asset base, and by tracking their highest performing investments, Insider Monkey has figured out many investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Mario Gabelli of GAMCO Investors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the fresh hedge fund action encompassing The J.M. Smucker Company (NYSE:SJM).

How have hedgies been trading The J.M. Smucker Company (NYSE:SJM)?

At Q1’s end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SJM over the last 18 quarters. So, let’s check out 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, John W. Rogers’s Ariel Investments has the number one position in The J.M. Smucker Company (NYSE:SJM), worth close to $122.6 million, amounting to 2.2% of its total 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, led by Cliff Asness, holding a $104.6 million position; 0.2% of its 13F portfolio is allocated to the company. Other peers that hold long positions consist of Renaissance Technologies, Mario Gabelli’s GAMCO Investors and Jack Woodruff’s Candlestick Capital Management. In terms of the portfolio weights assigned to each position Ariel Investments allocated the biggest weight to The J.M. Smucker Company (NYSE:SJM), around 2.15% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, designating 1.25 percent of its 13F equity portfolio to SJM.

As one would reasonably expect, specific money managers were leading the bulls’ herd. Candlestick Capital Management, managed by Jack Woodruff, created the largest position in The J.M. Smucker Company (NYSE:SJM). Candlestick Capital Management had $25 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $11.6 million investment in the stock during the quarter. The following funds were also among the new SJM investors: Robert Joseph Caruso’s Select Equity Group, John Brennan’s Sirios Capital Management, and Thomas Bailard’s Bailard Inc.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as The J.M. Smucker Company (NYSE:SJM) but similarly valued. These stocks are Domino’s Pizza, Inc. (NYSE:DPZ), Weyerhaeuser Co. (NYSE:WY), The Hartford Financial Services Group Inc (NYSE:HIG), and CBRE Group, Inc. (NYSE:CBRE). This group of stocks’ market caps are closest to SJM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DPZ 45 1759501 14
WY 35 195583 5
HIG 37 708354 3
CBRE 33 1142791 3
Average 37.5 951557 6.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.5 hedge funds with bullish positions and the average amount invested in these stocks was $952 million. That figure was $479 million in SJM’s case. Domino’s Pizza, Inc. (NYSE:DPZ) is the most popular stock in this table. On the other hand CBRE Group, Inc. (NYSE:CBRE) is the least popular one with only 33 bullish hedge fund positions. The J.M. Smucker Company (NYSE:SJM) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately SJM wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); SJM investors were disappointed as the stock returned 3.4% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.