Did Hedge Funds Make The Right Call On Air Transport Services Group Inc. (ATSG) ?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtAir Transport Services Group Inc. (NASDAQ:ATSG) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is Air Transport Services Group Inc. (NASDAQ:ATSG) a buy right now? Prominent investors were taking a bullish view. The number of bullish hedge fund bets rose by 2 recently. Our calculations also showed that ATSG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most shareholders, hedge funds are seen as unimportant, old investment tools of years past. While there are greater than 8000 funds in operation at the moment, We hone in on the top tier of this group, about 850 funds. Most estimates calculate that this group of people administer the lion’s share of all hedge funds’ total asset base, and by paying attention to their first-class picks, Insider Monkey has figured out a number of investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


Paul Tudor Jones of Tudor Investment Corp

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Keeping this in mind let’s take a look at the new hedge fund action encompassing Air Transport Services Group Inc. (NASDAQ:ATSG).

Hedge fund activity in Air Transport Services Group Inc. (NASDAQ:ATSG)

At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ATSG over the last 18 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

More specifically, Moab Capital Partners was the largest shareholder of Air Transport Services Group Inc. (NASDAQ:ATSG), with a stake worth $35.6 million reported as of the end of September. Trailing Moab Capital Partners was Polar Capital, which amassed a stake valued at $25 million. Private Capital Management, Prescott Group Capital Management, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Moab Capital Partners allocated the biggest weight to Air Transport Services Group Inc. (NASDAQ:ATSG), around 14.77% of its 13F portfolio. Private Capital Management is also relatively very bullish on the stock, earmarking 6.78 percent of its 13F equity portfolio to ATSG.

Now, key money managers were breaking ground themselves. Intrinsic Edge Capital, managed by Mark Coe, created the largest position in Air Transport Services Group Inc. (NASDAQ:ATSG). Intrinsic Edge Capital had $5.4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $0.6 million investment in the stock during the quarter. The other funds with brand new ATSG positions are Paul Tudor Jones’s Tudor Investment Corp and Greg Eisner’s Engineers Gate Manager.

Let’s also examine hedge fund activity in other stocks similar to Air Transport Services Group Inc. (NASDAQ:ATSG). These stocks are Tompkins Financial Corporation (NYSE:TMP), PC Connection, Inc. (NASDAQ:CNXN), TG Therapeutics Inc (NASDAQ:TGTX), and Plug Power, Inc. (NASDAQ:PLUG). This group of stocks’ market valuations resemble ATSG’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TMP 4 14209 -2
CNXN 10 43318 -5
TGTX 26 260243 4
PLUG 15 92142 2
Average 13.75 102478 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $116 million in ATSG’s case. TG Therapeutics Inc (NASDAQ:TGTX) is the most popular stock in this table. On the other hand Tompkins Financial Corporation (NYSE:TMP) is the least popular one with only 4 bullish hedge fund positions. Air Transport Services Group Inc. (NASDAQ:ATSG) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on ATSG, though not to the same extent, as the stock returned 21.8% during the second quarter and outperformed the market as well.

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