Where Do Hedge Funds Stand On John Wiley & Sons (JW)?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding John Wiley & Sons Inc (NYSE:JW).

John Wiley & Sons Inc (NYSE:JW) was in 17 hedge funds’ portfolios at the end of September. The all time high for this statistic is 22. JW investors should pay attention to an increase in activity from the world’s largest hedge funds of late. There were 16 hedge funds in our database with JW positions at the end of the second quarter. Our calculations also showed that JW isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s go over the fresh hedge fund action surrounding John Wiley & Sons Inc (NYSE:JW).

Do Hedge Funds Think JW Is A Good Stock To Buy Now?

At Q3’s end, a total of 17 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 20 hedge funds with a bullish position in JW a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

Among these funds, D E Shaw held the most valuable stake in John Wiley & Sons Inc (NYSE:JW), which was worth $10 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $9.6 million worth of shares. Clearline Capital, Arrowstreet Capital, and GLG Partners 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 Clearline Capital allocated the biggest weight to John Wiley & Sons Inc (NYSE:JW), around 2.22% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, designating 0.06 percent of its 13F equity portfolio to JW.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Clearline Capital, managed by Marc Majzner, initiated the largest position in John Wiley & Sons Inc (NYSE:JW). Clearline Capital had $8.5 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $1.2 million investment in the stock during the quarter. The following funds were also among the new JW investors: Dmitry Balyasny’s Balyasny Asset Management, David Harding’s Winton Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as John Wiley & Sons Inc (NYSE:JW) but similarly valued. We will take a look at Brandywine Realty Trust (NYSE:BDN), InterDigital, Inc. (NASDAQ:IDCC), Cronos Group Inc. (NASDAQ:CRON), Big Lots, Inc. (NYSE:BIG), Editas Medicine, Inc. (NASDAQ:EDIT), Minerals Technologies Inc (NYSE:MTX), and CIT Group Inc. (NYSE:CIT). This group of stocks’ market values are similar to JW’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BDN 14 22407 2
IDCC 24 321360 1
CRON 10 59912 -4
BIG 23 123587 1
EDIT 17 89449 -5
MTX 14 94211 -3
CIT 27 262969 0
Average 18.4 139128 -1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.4 hedge funds with bullish positions and the average amount invested in these stocks was $139 million. That figure was $59 million in JW’s case. CIT Group Inc. (NYSE:CIT) is the most popular stock in this table. On the other hand Cronos Group Inc. (NASDAQ:CRON) is the least popular one with only 10 bullish hedge fund positions. John Wiley & Sons Inc (NYSE:JW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for JW is 49.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on JW as the stock returned 37.9% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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