Were Hedge Funds Right About Souring On JELD-WEN Holding, Inc. (JELD)?

The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded JELD-WEN Holding, Inc. (NYSE:JELD) based on those filings.

Is JELD-WEN Holding, Inc. (NYSE:JELD) a buy, sell, or hold? Money managers are selling. The number of bullish hedge fund bets were cut by 5 lately. Our calculations also showed that JELD isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most investors, hedge funds are perceived as underperforming, outdated financial vehicles of years past. While there are over 8000 funds trading at the moment, Our experts hone in on the leaders of this group, about 750 funds. These investment experts control bulk of the smart money’s total asset base, and by following their finest investments, Insider Monkey has identified numerous investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

John Overdeck of Two Sigma

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to review the fresh hedge fund action encompassing JELD-WEN Holding, Inc. (NYSE:JELD).

What does smart money think about JELD-WEN Holding, Inc. (NYSE:JELD)?

At the end of the second quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -24% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards JELD over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with JELD Positions

According to Insider Monkey’s hedge fund database, Richard S. Pzena’s Pzena Investment Management has the most valuable position in JELD-WEN Holding, Inc. (NYSE:JELD), worth close to $162.5 million, amounting to 0.9% of its total 13F portfolio. On Pzena Investment Management’s heels is Hound Partners, managed by Jonathan Auerbach, which holds a $113.6 million position; the fund has 5.5% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish comprise John Smith Clark’s Southpoint Capital Advisors, William C. Martin’s Raging Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Since JELD-WEN Holding, Inc. (NYSE:JELD) has experienced bearish sentiment from hedge fund managers, we can see that there is a sect of hedgies that decided to sell off their full holdings in the second quarter. Interestingly, Gregg Moskowitz’s Interval Partners dropped the biggest investment of the 750 funds watched by Insider Monkey, totaling close to $4.6 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also cut its stock, about $1 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 5 funds in the second quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as JELD-WEN Holding, Inc. (NYSE:JELD) but similarly valued. We will take a look at Commercial Metals Company (NYSE:CMC), Zai Lab Limited (NASDAQ:ZLAB), Select Medical Holdings Corporation (NYSE:SEM), and Terex Corporation (NYSE:TEX). This group of stocks’ market valuations are closest to JELD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CMC 17 289611 6
ZLAB 17 240494 0
SEM 17 131929 -4
TEX 15 260697 -6
Average 16.5 230683 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $366 million in JELD’s case. Commercial Metals Company (NYSE:CMC) is the most popular stock in this table. On the other hand Terex Corporation (NYSE:TEX) is the least popular one with only 15 bullish hedge fund positions. JELD-WEN Holding, Inc. (NYSE:JELD) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately JELD wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); JELD investors were disappointed as the stock returned -9.1% during the third quarter 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 in 2019.

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