Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Echo Global Logistics, Inc. (NASDAQ:ECHO).
Is Echo Global Logistics, Inc. (NASDAQ:ECHO) a good stock to buy now? The smart money is indeed becoming less confident. The number of long hedge fund investments suffered a reduction of 1 recently. There were 10 hedge funds in our database with ECHO positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as CommerceHub Inc (NASDAQ:CHUBA), Heron Therapeutics Inc (NASDAQ:HRTX), and Rent-A-Center Inc (NASDAQ:RCII) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, let’s check out the recent action regarding Echo Global Logistics, Inc. (NASDAQ:ECHO).
How have hedgies been trading Echo Global Logistics, Inc. (NASDAQ:ECHO)?
Heading into the fourth quarter of 2016, nine funds tracked by Insider Monkey held long positions in this stock, down by 10% from the end of the second quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in ECHO at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Ken Griffin’s Citadel Investment Group holds the most valuable position in Echo Global Logistics, Inc. (NASDAQ:ECHO). Citadel Investment Group has a $14.7 million position in the stock. The second most bullish fund is Malcolm Fairbairn’s Ascend Capital, with a $14.5 million position. Some other professional money managers with similar optimism include Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, Amy Minella’s Cardinal Capital, and Matthew Hulsizer’s PEAK6 Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.