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The J.M. Smucker Company (SJM): Hedge Funds Interest Keeps Inching Up

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of The J.M. Smucker Company (NYSE:SJM) based on that data and determine whether they were really smart about the stock.

The J.M. Smucker Company (NYSE:SJM) has seen an increase in enthusiasm from smart money recently. The J.M. Smucker Company (NYSE:SJM) was in 38 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 47. Our calculations also showed that SJM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are a multitude of formulas stock market investors employ to appraise stocks. A duo of the less utilized formulas are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outperform the S&P 500 by a superb amount (see the details here).

John Rogers Ariel Investments

John Rogers of Ariel Investments

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a peek at the fresh hedge fund action surrounding The J.M. Smucker Company (NYSE:SJM).

What have hedge funds been doing with The J.M. Smucker Company (NYSE:SJM)?

At second quarter’s end, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. On the other hand, there were a total of 26 hedge funds with a bullish position in SJM a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is SJM A Good Stock To Buy?

The largest stake in The J.M. Smucker Company (NYSE:SJM) was held by Renaissance Technologies, which reported holding $146.7 million worth of stock at the end of September. It was followed by Ariel Investments with a $113.9 million position. Other investors bullish on the company included AQR Capital Management, Two Sigma Advisors, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Ariel Investments allocated the biggest weight to The J.M. Smucker Company (NYSE:SJM), around 1.73% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, setting aside 1.35 percent of its 13F equity portfolio to SJM.

Consequently, specific money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most outsized position in The J.M. Smucker Company (NYSE:SJM). Arrowstreet Capital had $2.3 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $2.2 million position during the quarter. The other funds with brand new SJM positions are Charles de Vaulx’s International Value Advisers, William Harnisch’s Peconic Partners LLC, and Qing Li’s Sciencast 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. These stocks are W.P. Carey Inc. (NYSE:WPC), LINE Corporation (NYSE:LN), Catalent Inc (NYSE:CTLT), NVR, Inc. (NYSE:NVR), HEICO Corporation (NYSE:HEI), Alliant Energy Corporation (NYSE:LNT), and Extra Space Storage, Inc. (NYSE:EXR). This group of stocks’ market caps are closest to SJM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WPC 23 93673 1
LN 8 116785 1
CTLT 35 490420 8
NVR 39 939775 5
HEI 46 667415 7
LNT 23 377241 -7
EXR 27 176001 11
Average 28.7 408759 3.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $409 million. That figure was $674 million in SJM’s case. HEICO Corporation (NYSE:HEI) is the most popular stock in this table. On the other hand LINE Corporation (NYSE:LN) is the least popular one with only 8 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. Our overall hedge fund sentiment score for SJM is 70.7. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Hedge funds were also right about betting on SJM, though not to the same extent, as the stock returned 14.5% since the end of June and outperformed the market as well.

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