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Hedge Funds Are Crazy About Knight Transportation (NYSE:KNX) – Swift Transportation Co (NYSE:SWFT), Werner Enterprises, Inc. (NASDAQ:WERN)

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Is Knight Transportation (NYSE:KNX) the right investment to pursue these days? Money managers are betting on the stock. The number of bullish hedge fund positions inched up by 1 lately.

To most stock holders, hedge funds are perceived as unimportant, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading today, we look at the bigwigs of this group, around 450 funds. It is estimated that this group controls most of the smart money’s total capital, and by monitoring their highest performing equity investments, we have formulated a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outpaced 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 outperformed the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Swift Transportation CoEqually as key, optimistic insider trading sentiment is another way to break down the financial markets. Obviously, there are lots of incentives for an executive to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the market-beating potential of this method if piggybackers know what to do (learn more here).

Consequently, we’re going to take a glance at the latest action regarding Knight Transportation (NYSE:KNX).

What have hedge funds been doing with Knight Transportation (NYSE:KNX)?

At the end of the fourth quarter, a total of 12 of the hedge funds we track were long in this stock, a change of 9% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly.

When looking at the hedgies we track, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Knight Transportation (NYSE:KNX). Arrowstreet Capital has a $23 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Vinik Asset Management, managed by Jeffrey Vinik, which held a $11 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedgies that are bullish include Ken Gray and Steve Walsh’s Bryn Mawr Capital, Chuck Royce’s Royce & Associates and Jim Simons’s Renaissance Technologies.

As one would reasonably expect, specific money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the largest position in Knight Transportation (NYSE:KNX). Arrowstreet Capital had 23 million invested in the company at the end of the quarter. John Fichthorn’s Dialectic Capital Management also made a $5 million investment in the stock during the quarter. The other funds with brand new KNX positions are Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Insider trading activity in Knight Transportation (NYSE:KNX)

Insider buying is best served when the company we’re looking at has experienced transactions within the past six months. Over the last half-year time frame, Knight Transportation (NYSE:KNX) has seen zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Knight Transportation (NYSE:KNX). These stocks are Universal Truckload Services, Inc. (NASDAQ:UACL), Swift Transportation Co (NYSE:SWFT), Con-way Inc (NYSE:CNW), Werner Enterprises, Inc. (NASDAQ:WERN), and Heartland Express, Inc. (NASDAQ:HTLD). This group of stocks belong to the trucking industry and their market caps resemble KNX’s market cap.

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