At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
J C Penney Company Inc (NYSE:JCP) was in 32 hedge funds’ portfolios at the end of the third quarter of 2016. JCP investors should pay attention to an increase in activity from the world’s largest hedge funds lately. There were 28 hedge funds in our database with JCP positions at the end of the previous quarter. At the end of this article we will also compare JCP to other stocks including Beacon Roofing Supply, Inc. (NASDAQ:BECN), MFA Financial, Inc. (NYSE:MFA), and Primerica, Inc. (NYSE:PRI) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, let’s view the new action regarding J C Penney Company Inc (NYSE:JCP).
Hedge fund activity in J C Penney Company Inc (NYSE:JCP)
At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 14% increase from the second quarter of 2016. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Jim Simons’ Renaissance Technologies has the number one position in J C Penney Company Inc (NYSE:JCP), worth close to $124.8 million. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $68.7 million position. Remaining professional money managers that are bullish comprise David Costen Haley’s HBK Investments, Israel Englander’s Millennium Management and Anand Parekh’s Alyeska Investment Group.
As one would reasonably expect, some big names have jumped into J C Penney Company Inc (NYSE:JCP) headfirst. Millennium Management assembled the most valuable position in J C Penney Company Inc (NYSE:JCP). Millennium Management had $35.7 million invested in the company at the end of the quarter. Alyeska Investment Group also made a $32.9 million investment in the stock during the quarter. The other funds with brand new JCP positions are Ken Grossman and Glen Schneider’s SG Capital Management, Ray Dalio’s Bridgewater Associates, and Peter Muller’s PDT Partners.
Let’s also examine hedge fund activity in other stocks similar to J C Penney Company Inc (NYSE:JCP). We will take a look at Beacon Roofing Supply, Inc. (NASDAQ:BECN), MFA Financial, Inc. (NYSE:MFA), Primerica, Inc. (NYSE:PRI), and AMC Entertainment Holdings Inc (NYSE:AMC). This group of stocks’ market values are closest to JCP’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $219 million. That figure was $460 million in JCP’s case. Beacon Roofing Supply, Inc. (NASDAQ:BECN) is the most popular stock in this table. On the other hand MFA Financial, Inc. (NYSE:MFA) is the least popular one with only 11 bullish hedge fund positions. J C Penney Company Inc (NYSE:JCP) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal and hedge fund sentiment was positive during the quarter. In this regard JCP might be a good candidate to consider a long position in.