“Market volatility has picked up again over the past few weeks. Headlines highlight risks regarding interest rates, the Fed, China, house prices, auto sales, trade wars, and more. Uncertainty abounds. But doesn’t it always? I have no view on whether the recent volatility will continue for a while, or whether the market will be back at all-time highs before we know it. I remain focused on preserving and growing our capital, and continue to believe that the best way to do so is via a value-driven, concentrated, patient approach. I shun consensus holdings, rich valuations, and market fads, in favor of solid, yet frequently off-the-beaten-path, businesses run by excellent, aligned management teams, purchased at deep discounts to intrinsic value,” are the words of Maran Capital’s Dan Roller. His stock picks have been beating the S&P 500 Index handily. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards J2 Global Inc (NASDAQ:JCOM) and see how it was affected.
Is J2 Global Inc (NASDAQ:JCOM) a buy here? Prominent investors are turning bullish. The number of bullish hedge fund positions inched up by 4 lately. Our calculations also showed that jcom isn’t among the 30 most popular stocks among hedge funds.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to view the latest hedge fund action surrounding J2 Global Inc (NASDAQ:JCOM).
How are hedge funds trading J2 Global Inc (NASDAQ:JCOM)?
Heading into the fourth quarter of 2018, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in JCOM over the last 13 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the number one position in J2 Global Inc (NASDAQ:JCOM). AQR Capital Management has a $54 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Cardinal Capital, led by Amy Minella, holding a $47.7 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other peers that hold long positions encompass Noam Gottesman’s GLG Partners, Chuck Royce’s Royce & Associates and D. E. Shaw’s D E Shaw.
As aggregate interest increased, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most valuable position in J2 Global Inc (NASDAQ:JCOM). Millennium Management had $2.1 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $1.8 million investment in the stock during the quarter. The other funds with brand new JCOM positions are Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Benjamin A. Smith’s Laurion Capital Management, and Bruce Kovner’s Caxton Associates LP.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as J2 Global Inc (NASDAQ:JCOM) but similarly valued. These stocks are Eagle Materials, Inc. (NYSE:EXP), New Jersey Resources Corp (NYSE:NJR), Portland General Electric Company (NYSE:POR), and Hancock Whitney Corporation (NASDAQ:HWC). This group of stocks’ market caps resemble JCOM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXP | 32 | 816135 | 6 |
| NJR | 12 | 65883 | -2 |
| POR | 16 | 269447 | 0 |
| HWC | 24 | 192263 | 2 |
| Average | 21 | 335932 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $336 million. That figure was $208 million in JCOM’s case. Eagle Materials, Inc. (NYSE:EXP) is the most popular stock in this table. On the other hand New Jersey Resources Corp (NYSE:NJR) is the least popular one with only 12 bullish hedge fund positions. J2 Global Inc (NASDAQ:JCOM) 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. In this regard EXP might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
