Is Jason Industries Inc (JASN) Going To Burn These Hedge Funds ?

Debasis Saha

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Jason Industries Inc (NASDAQ:JASN).

Jason Industries Inc (NASDAQ:JASN) investors should be aware of a decrease in hedge fund sentiment of late. JASN was in 4 hedge funds' portfolios at the end of September. There were 5 hedge funds in our database with JASN holdings at the end of the previous quarter. Our calculations also showed that JASN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

According to most traders, hedge funds are assumed to be worthless, old financial tools of years past. While there are more than 8000 funds trading at the moment, Our experts look at the elite of this group, about 750 funds. It is estimated that this group of investors manage the lion's share of the smart money's total asset base, and by observing their finest equity investments, Insider Monkey has spotted a few investment strategies that have historically exceeded the market. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

[caption id="attachment_267751" align="alignnone" width="600"] Nelson Obus of Wynnefield Capital[/caption]

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now let's check out the key hedge fund action surrounding Jason Industries Inc (NASDAQ:JASN).

What have hedge funds been doing with Jason Industries Inc (NASDAQ:JASN)?

Heading into the fourth quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards JASN over the last 17 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is JASN A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Wynnefield Capital, managed by Nelson Obus, holds the biggest position in Jason Industries Inc (NASDAQ:JASN). Wynnefield Capital has a $1.9 million position in the stock, comprising 1% of its 13F portfolio. Coming in second is Renaissance Technologies, holding a $0.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that are bullish comprise Stephen Loukas, David A. Lorber, Zachary George's FrontFour Capital Group, Ken Griffin's Citadel Investment Group and . In terms of the portfolio weights assigned to each position Wynnefield Capital allocated the biggest weight to Jason Industries Inc (NASDAQ:JASN), around 0.99% of its 13F portfolio. FrontFour Capital Group is also relatively very bullish on the stock, setting aside 0.31 percent of its 13F equity portfolio to JASN.

Seeing as Jason Industries Inc (NASDAQ:JASN) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there were a few money managers that slashed their entire stakes by the end of the third quarter. At the top of the heap, Charles Paquelet's Skylands Capital dumped the largest position of the 750 funds tracked by Insider Monkey, totaling an estimated $0.3 million in stock, and Alexander Mitchell's Scopus Asset Management was right behind this move, as the fund dropped about $0 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds by the end of the third quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Jason Industries Inc (NASDAQ:JASN) but similarly valued. We will take a look at Ameri Holdings, Inc. (NASDAQ:AMRH), IZEA Inc. (NASDAQ:IZEA), Genetic Technologies Limited (NASDAQ:GENE), and Schmitt Industries, Inc. (NASDAQ:SMIT). All of these stocks' market caps are closest to JASN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMRH,1,33,0 IZEA,1,126,-1 GENE,1,214,-1 SMIT,1,572,0 Average,1,236,-0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 1 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $2 million in JASN's case. Ameri Holdings, Inc. (NASDAQ:AMRH) is the most popular stock in this table. On the other hand Ameri Holdings, Inc. (NASDAQ:AMRH) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Jason Industries Inc (NASDAQ:JASN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately JASN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on JASN were disappointed as the stock returned -52.8% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.

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

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