Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Is JMP Group Inc. (NYSE:JMP) the right investment to pursue these days? The best stock pickers are turning less bullish. The number of long hedge fund positions shrunk by 1 recently. JMP was in 4 hedge funds’ portfolios at the end of the third quarter of 2015. There were 5 hedge funds in our database with JMP holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Energy Fuels Inc Ordinary Shares (Canada) (NYSEMKT:UUUU), Supercom Ltd (NASDAQ:SPCB), and Consumer Portfolio Services, Inc. (NASDAQ:CPSS) to gather more data points.
With all of this in mind, we’re going to take a look at the latest action surrounding JMP Group Inc. (NYSE:JMP).
What does the smart money think about JMP Group Inc. (NYSE:JMP)?
At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the most valuable position in JMP Group Inc. (NYSE:JMP). Royce & Associates has a $4.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, managed by Jim Simons, which holds a $0.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions contain Andy Redleaf’s Whitebox Advisors, and Paul J. Isaac’s Arbiter Partners Capital Management.
Since JMP Group Inc. (NYSE:JMP) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of money managers who were dropping their positions entirely last quarter. At the top of the heap, Eric Halet and Davide Serra’s Algebris Investments sold off the biggest stake of the “upper crust” of funds watched by Insider Monkey, totaling close to $0.8 million in stock, and Jacob Gottlieb’s Visium Asset Management was right behind this move, as the fund cut about $0.1 million worth.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as JMP Group Inc. (NYSE:JMP) but similarly valued. We will take a look at Energy Fuels Inc Ordinary Shares (Canada) (NYSEMKT:UUUU), Supercom Ltd (NASDAQ:SPCB), Consumer Portfolio Services, Inc. (NASDAQ:CPSS), and Veracyte Inc (NASDAQ:VCYT). This group of stocks’ market valuations resemble JMP’s market valuation.
|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 an 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $5 million in JMP’s case. Consumer Portfolio Services, Inc. (NASDAQ:CPSS) is the most popular stock in this table. On the other hand Energy Fuels Inc Ordinary Shares (Canada) (NYSEMKT:UUUU) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks JMP Group Inc. (NYSE:JMP) is even less popular than UUUU. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.