A market correction in the third quarter, spurred by a number of global macroeconomic concerns ended up having a negative impact on the markets and many hedge funds as a result. The stocks of smaller companies were especially hard hit during this time as investors fled to investments seen as being safer. This is evident in the fact that the Russell 2000 ETF underperformed the S&P 500 ETF by 14 percentage points between June 25 and the end of October. We also received indications that hedge funds were trimming their positions amid the market volatility and uncertainty, and given their greater inclination towards smaller cap stocks than other investors, it follows that a stronger sell-off occurred in those stocks. Let’s study the hedge fund sentiment to see how those concerns affected their ownership of The J.M. Smucker Company (NYSE:SJM) during the quarter.
Is The J.M. Smucker Company (NYSE:SJM) a buy here? Investors who are in the know are taking an optimistic view. The number of long hedge fund positions went up by 17 lately. 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 Rockwell Automation (NYSE:ROK), Seagate Technology PLC (NASDAQ:STX), and Molson Coors Brewing Company (NYSE:TAP) to gather more data points.
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With all of this in mind, let’s take a glance at the fresh action regarding The J.M. Smucker Company (NYSE:SJM).
Hedge fund activity in The J.M. Smucker Company (NYSE:SJM)
Heading into Q4, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 57% from the previous quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Daniel S. Och’s OZ Management has the largest position in The J.M. Smucker Company (NYSE:SJM), worth close to $314.9 million, accounting for 1.1% of its total 13F portfolio. The second most bullish fund manager is Senator Investment Group, led by Doug Silverman and Alexander Klabin, holding a $165.4 million position; the fund has 2% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions contain Ricky Sandler’s Eminence Capital, Dan Loeb’s Third Point and John Brennan’s Sirios Capital Management.
As one would reasonably expect, key money managers have been driving this bullishness. OZ Management established the most outsized position in The J.M. Smucker Company (NYSE:SJM). OZ Management had $314.9 million invested in the company at the end of the quarter. Robert Pohly’s Samlyn Capital also initiated a $55.1 million position during the quarter. The following funds were also among the new SJM investors: Jim Simons’ Renaissance Technologies, Dmitry Balyasny’s Balyasny Asset Management, and David Harding’s Winton Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as The J.M. Smucker Company (NYSE:SJM) but similarly valued. We will take a look at Rockwell Automation (NYSE:ROK), Seagate Technology PLC (NASDAQ:STX), Molson Coors Brewing Company (NYSE:TAP), and Nordstrom, Inc. (NYSE:JWN). This group of stocks’ market values are similar to SJM’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 43 hedge funds with bullish positions and the average amount invested in these stocks was $1.24 billion. That figure was $1.58 billion in SJM’s case. Molson Coors Brewing Company (NYSE:TAP) is the most popular stock in this table. On the other hand Seagate Technology PLC (NASDAQ:STX) is the least popular one with only 31 bullish hedge fund positions. The J.M. Smucker Company (NYSE:SJM) 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. In this regard TAP might be a better candidate to consider a long position.