Did Hedge Funds Drop The Ball On Old Dominion Freight Line, Inc. (ODFL) ?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Old Dominion Freight Line, Inc. (NASDAQ:ODFL) based on that data.

Old Dominion Freight Line, Inc. (NASDAQ:ODFL) has seen a decrease in support from the world’s most elite money managers recently. Our calculations also showed that ODFL isn’t among the 30 most popular stocks among hedge funds.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

Dmitry Balyasny

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s go over the new hedge fund action surrounding Old Dominion Freight Line, Inc. (NASDAQ:ODFL).

What have hedge funds been doing with Old Dominion Freight Line, Inc. (NASDAQ:ODFL)?

Heading into the third quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in ODFL a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

No of Hedge Funds with ODFL Positions

Among these funds, Scopus Asset Management held the most valuable stake in Old Dominion Freight Line, Inc. (NASDAQ:ODFL), which was worth $31.5 million at the end of the second quarter. On the second spot was Millennium Management which amassed $29.3 million worth of shares. Moreover, AQR Capital Management, Sirios Capital Management, and Balyasny Asset Management were also bullish on Old Dominion Freight Line, Inc. (NASDAQ:ODFL), allocating a large percentage of their portfolios to this stock.

Due to the fact that Old Dominion Freight Line, Inc. (NASDAQ:ODFL) has experienced bearish sentiment from the smart money, logic holds that there were a few fund managers that elected to cut their entire stakes heading into Q3. Interestingly, Clint Carlson’s Carlson Capital said goodbye to the largest stake of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $15.1 million in stock. Doug Gordon, Jon Hilsabeck and Don Jabro’s fund, Shellback Capital, also said goodbye to its stock, about $8.7 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 3 funds heading into Q3.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Old Dominion Freight Line, Inc. (NASDAQ:ODFL) but similarly valued. These stocks are Rollins, Inc. (NYSE:ROL), Wabtec Corporation (NYSE:WAB), Sun Communities Inc (NYSE:SUI), and Raymond James Financial, Inc. (NYSE:RJF). This group of stocks’ market caps are similar to ODFL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ROL 23 253576 3
WAB 27 1363344 -9
SUI 20 429029 2
RJF 35 764230 0
Average 26.25 702545 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $703 million. That figure was $200 million in ODFL’s case. Raymond James Financial, Inc. (NYSE:RJF) is the most popular stock in this table. On the other hand Sun Communities Inc (NYSE:SUI) is the least popular one with only 20 bullish hedge fund positions. Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks (view the video below) among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on ODFL as the stock returned 14% during the same time frame and outperformed the market by an even larger margin.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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