Echo Global Logistics, Inc. (ECHO): Insiders Are Buying, Should You?

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Echo Global Logistics, Inc. (NASDAQ:ECHO) was in 9 hedge funds' portfolio at the end of March. ECHO has experienced an increase in enthusiasm from smart money recently. There were 7 hedge funds in our database with ECHO holdings at the end of the previous quarter.

To most stock holders, hedge funds are seen as unimportant, old financial vehicles of the past. While there are more than 8000 funds with their doors open today, we choose to focus on the masters of this group, close to 450 funds. It is widely believed that this group has its hands on the majority of the hedge fund industry's total asset base, and by watching their top picks, we have formulated a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Echo Global Logistics, Inc. (NASDAQ:ECHO)

Equally as integral, bullish insider trading sentiment is another way to break down the investments you're interested in. As the old adage goes: there are many reasons for an executive to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this method if you know what to do (learn more here).

With these "truths" under our belt, it's important to take a gander at the key action surrounding Echo Global Logistics, Inc. (NASDAQ:ECHO).

How have hedgies been trading Echo Global Logistics, Inc. (NASDAQ:ECHO)?

At Q1's end, a total of 9 of the hedge funds we track were long in this stock, a change of 29% from the first quarter. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings meaningfully.

Of the funds we track, J. Carlo Cannell's Cannell Capital had the biggest position in Echo Global Logistics, Inc. (NASDAQ:ECHO), worth close to $4.2 million, comprising 2.7% of its total 13F portfolio. The second largest stake is held by Catapult Capital Management, managed by Israel Englander, which held a $3.3 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Matthew Hulsizer's PEAK6 Capital Management, Israel Englander's Millennium Management and John Overdeck and David Siegel's Two Sigma Advisors.

Now, key money managers were leading the bulls' herd. PEAK6 Capital Management, managed by Matthew Hulsizer, established the most valuable call position in Echo Global Logistics, Inc. (NASDAQ:ECHO). PEAK6 Capital Management had 3.1 million invested in the company at the end of the quarter. Richard Driehaus's Driehaus Capital also made a $0.4 million investment in the stock during the quarter.

How are insiders trading Echo Global Logistics, Inc. (NASDAQ:ECHO)?

Insider buying is best served when the company in focus has seen transactions within the past half-year. Over the latest 180-day time period, Echo Global Logistics, Inc. (NASDAQ:ECHO) has seen 1 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let's go over hedge fund and insider activity in other stocks similar to Echo Global Logistics, Inc. (NASDAQ:ECHO). These stocks are Arkansas Best Corporation (NASDAQ:ABFS), Universal Truckload Services, Inc. (NASDAQ:UACL), Marten Transport, Ltd (NASDAQ:MRTN), Saia Inc (NASDAQ:SAIA), and Celadon Group, Inc. (NYSE:CGI). This group of stocks are in the trucking industry and their market caps resemble ECHO's market cap.

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