To find out whether a stock is worth investing in, the easiest thing an investor can do is look at how many sophisticated investors back that company. That’s because when a lot of such investors are behind a stock, the chances of it outperforming increases substantially. At Insider Monkey, we track over 800 hedge funds, but pay special attention to the 58 hedge funds that were founded by or are run by billionaires because these investors usually identify opportunities in the equity markets well ahead of the crowd. Having said that, in this post, we will take a look at five stocks from the transportation sector that were owned by the maximum number of billionaire investors covered by us going into the second quarter.
We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).
#5 FedEx Corporation (NYSE:FDX)
– Billionaires with long positions (as of March 31): 8
– Aggregate value of billionaires’ holdings (as of March 31): $1.82 billion
First up is logistics giant FedEx Corporation (NYSE:FDX), whose ownership among funds managed by billionaires covered by us remained unchanged during the first quarter, but the aggregate value of their holdings increased by $120 million. Billionaires’ firms that increased their stake in the company during the first included Israel Englander’s Millennium Management, which brought up its holding by 22% to 275,034 shares. The company came out with much better than expected numbers for its fiscal 2016 third quarter, which caused its stock to soar and owing largely to that it is currently trading up 7.23% year-to-date. FedEx Corporation (NYSE:FDX) is expected to report its fiscal 2016 fourth quarter numbers next week and the consensus among analysts is for it to report EPS of $3.29 on revenue of $12.78 billion. For the same quarter of the previous financial year, it had reported EPS of 42.66 on revenue of $12.11 billion.
#4 CSX Corporation (NASDAQ:CSX)
– Billionaires with long positions (as of March 31): 9
– Aggregate value of billionaires’ holdings (as of March 31): $4.97 billion
The number of billionaire investors long CSX Corporation (NASDAQ:CSX) remained constant during the first quarter. However, the aggregate value of their holdings in the company shot up by $300 million during the same time. After suffering a large drop in the second-half of 2015, CSX Corporation (NASDAQ:CSX)’s stock has largely been stable this year and currently trades up marginally, by 2.86%, for 2016. Most analysts feel that the stock is undervalued right now as it trades at a trailing P/E of 13.88, which is lower than its historical average trailing P/E and is also lower than the current average trailing P/E of 16.72 of the railroad industry. On June 10, analysts at BMO Capital Markets reiterated their ‘Buy’ rating on the stock. Billionaire trader Steve Cohen‘s Point72 Asset Management boosted its stake in CSX Corporation (NASDAQ:CSX) during the first quarter by 179% to 4.48 million shares.