At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Jerash Holdings (US), Inc. (NASDAQ:JRSH).
Hedge fund interest in Jerash Holdings (US), Inc. (NASDAQ:JRSH) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that JRSH 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). At the end of this article we will also compare JRSH to other stocks including Sonim Technologies, Inc. (NASDAQ:SONM), Baudax Bio, Inc. (NASDAQ:BXRX), and Atlas Technical Consultants, Inc. (NASDAQ:ATCX) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.
Chuck Royce of Royce & Associates
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 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. 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. With all of this in mind we're going to take a look at the latest hedge fund action encompassing Jerash Holdings (US), Inc. (NASDAQ:JRSH).
What have hedge funds been doing with Jerash Holdings (US), Inc. (NASDAQ:JRSH)?
At Q3's end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 3 hedge funds held shares or bullish call options in JRSH 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.
More specifically, Royce & Associates was the largest shareholder of Jerash Holdings (US), Inc. (NASDAQ:JRSH), with a stake worth $0.6 million reported as of the end of September. Trailing Royce & Associates was Renaissance Technologies, which amassed a stake valued at $0.3 million. Millennium Management was 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 Royce & Associates allocated the biggest weight to Jerash Holdings (US), Inc. (NASDAQ:JRSH), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.0003 percent of its 13F equity portfolio to JRSH.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks similar to Jerash Holdings (US), Inc. (NASDAQ:JRSH). We will take a look at Sonim Technologies, Inc. (NASDAQ:SONM), Baudax Bio, Inc. (NASDAQ:BXRX), Atlas Technical Consultants, Inc. (NASDAQ:ATCX), Trxade Group, Inc. (NASDAQ:MEDS), Moleculin Biotech, Inc. (NASDAQ:MBRX), IF Bancorp Inc (NASDAQ:IROQ), and Kazia Therapeutics Limited (NASDAQ:KZIA). This group of stocks' market caps resemble JRSH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SONM,6,4971,-5 BXRX,7,5134,-3 ATCX,9,10487,-1 MEDS,2,3855,0 MBRX,2,895,0 IROQ,2,2301,0 KZIA,1,523,0 Average,4.1,4024,-1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $1 million in JRSH's case. Atlas Technical Consultants, Inc. (NASDAQ:ATCX) is the most popular stock in this table. On the other hand Kazia Therapeutics Limited (NASDAQ:KZIA) is the least popular one with only 1 bullish hedge fund positions. Jerash Holdings (US), Inc. (NASDAQ:JRSH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for JRSH is 47.5. 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 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on JRSH as the stock returned 13.1% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.