Should I Avoid Jack in the Box Inc. (JACK)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Jack in the Box Inc. (NASDAQ:JACK)?

Jack in the Box Inc. (NASDAQ:JACK) was in 30 hedge funds’ portfolios at the end of March. The all time high for this statistic is 38. JACK has experienced a decrease in support from the world’s most elite money managers in recent months. There were 34 hedge funds in our database with JACK holdings at the end of December. Our calculations also showed that JACK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s view the recent hedge fund action encompassing Jack in the Box Inc. (NASDAQ:JACK).

Do Hedge Funds Think JACK Is A Good Stock To Buy Now?

At first quarter’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in JACK over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is JACK A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Scopus Asset Management, managed by Alexander Mitchell, holds the biggest position in Jack in the Box Inc. (NASDAQ:JACK). Scopus Asset Management has a $60.4 million position in the stock, comprising 0.8% of its 13F portfolio. The second largest stake is held by Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $44.1 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, Renaissance Technologies and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Kettle Hill Capital Management allocated the biggest weight to Jack in the Box Inc. (NASDAQ:JACK), around 1.46% of its 13F portfolio. Greenlight Capital is also relatively very bullish on the stock, earmarking 1.37 percent of its 13F equity portfolio to JACK.

Seeing as Jack in the Box Inc. (NASDAQ:JACK) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there is a sect of hedgies that elected to cut their positions entirely last quarter. At the top of the heap, Jack Woodruff’s Candlestick Capital Management cut the largest investment of the “upper crust” of funds tracked by Insider Monkey, valued at close to $33.7 million in stock. Lee Ainslie’s fund, Maverick Capital, also dumped its stock, about $6.2 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 4 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Jack in the Box Inc. (NASDAQ:JACK). We will take a look at Accolade, Inc. (NASDAQ:ACCD), Xencor Inc (NASDAQ:XNCR), Medifast, Inc. (NYSE:MED), Ameresco Inc (NYSE:AMRC), Rush Enterprises, Inc. (NASDAQ:RUSHB), Telephone & Data Systems, Inc. (NYSE:TDS), and First Bancorp (NYSE:FBP). This group of stocks’ market caps are similar to JACK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ACCD 19 471681 -2
XNCR 16 269589 0
MED 22 287110 4
AMRC 16 77274 1
RUSHB 4 54912 1
TDS 20 253689 -4
FBP 25 294812 2
Average 17.4 244152 0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $244 million. That figure was $303 million in JACK’s case. First Bancorp (NYSE:FBP) is the most popular stock in this table. On the other hand Rush Enterprises, Inc. (NASDAQ:RUSHB) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Jack in the Box Inc. (NASDAQ:JACK) is more popular among hedge funds. Our overall hedge fund sentiment score for JACK is 74.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Unfortunately JACK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on JACK were disappointed as the stock returned 1.7% since the end of the first quarter (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.