Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by nearly 10 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of SJW Group (NYSE:SJW).
SJW Group (NYSE:SJW) was in 19 hedge funds’ portfolios at the end of the third quarter of 2019. SJW has experienced an increase in hedge fund interest recently. There were 15 hedge funds in our database with SJW positions at the end of the previous quarter. Our calculations also showed that SJW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Tudor Jones of Tudor Investment Corp
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the fresh hedge fund action encompassing SJW Group (NYSE:SJW).
Hedge fund activity in SJW Group (NYSE:SJW)
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SJW over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in SJW Group (NYSE:SJW), which was worth $72.3 million at the end of the third quarter. On the second spot was Shelter Harbor Advisors which amassed $22.2 million worth of shares. Royce & Associates, Millennium Management, and Point72 Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Shelter Harbor Advisors allocated the biggest weight to SJW Group (NYSE:SJW), around 11.21% of its 13F portfolio. Water Asset Management is also relatively very bullish on the stock, dishing out 6.64 percent of its 13F equity portfolio to SJW.
Now, key money managers were leading the bulls’ herd. Tudor Investment Corp, managed by Paul Tudor Jones, established the most outsized position in SJW Group (NYSE:SJW). Tudor Investment Corp had $0.7 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $0.5 million investment in the stock during the quarter. The following funds were also among the new SJW investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, David Harding’s Winton Capital Management, and Donald Sussman’s Paloma Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as SJW Group (NYSE:SJW) but similarly valued. These stocks are Hillenbrand, Inc. (NYSE:HI), Stitch Fix, Inc. (NASDAQ:SFIX), Sogou Inc. (NYSE:SOGO), and Matador Resources Co (NYSE:MTDR). This group of stocks’ market caps resemble SJW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HI | 22 | 122793 | 4 |
| SFIX | 23 | 124598 | -5 |
| SOGO | 4 | 5194 | -1 |
| MTDR | 14 | 224980 | 2 |
| Average | 15.75 | 119391 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $119 million. That figure was $175 million in SJW’s case. Stitch Fix, Inc. (NASDAQ:SFIX) is the most popular stock in this table. On the other hand Sogou Inc. (NYSE:SOGO) is the least popular one with only 4 bullish hedge fund positions. SJW Group (NYSE:SJW) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SJW wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SJW were disappointed as the stock returned 4.1% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
