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Hedge Funds Are Betting On Air Transport Services Group Inc. (ATSG)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 752 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 September 30th. In this article we look at what those investors think of Air Transport Services Group Inc. (NASDAQ:ATSG).

Air Transport Services Group Inc. (NASDAQ:ATSG) was in 17 hedge funds’ portfolios at the end of the third quarter of 2019. ATSG investors should be aware of an increase in hedge fund interest recently. There were 15 hedge funds in our database with ATSG holdings at the end of the previous quarter. Our calculations also showed that ATSG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a glance at the fresh hedge fund action encompassing Air Transport Services Group Inc. (NASDAQ:ATSG).

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

At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ATSG over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

Among these funds, Moab Capital Partners held the most valuable stake in Air Transport Services Group Inc. (NASDAQ:ATSG), which was worth $41.2 million at the end of the third quarter. On the second spot was Private Capital Management which amassed $27.4 million worth of shares. ACK Asset Management, Polar Capital, 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 15.67% of its 13F portfolio. ACK Asset Management is also relatively very bullish on the stock, dishing out 6.95 percent of its 13F equity portfolio to ATSG.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. ExodusPoint Capital, managed by Michael Gelband, established the most valuable position in Air Transport Services Group Inc. (NASDAQ:ATSG). ExodusPoint Capital had $1.2 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also made a $0.7 million investment in the stock during the quarter. The only other fund with a brand new ATSG position is Ken Griffin’s Citadel Investment Group.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Air Transport Services Group Inc. (NASDAQ:ATSG) but similarly valued. We will take a look at Materion Corporation (NYSE:MTRN), Centennial Resource Development, Inc. (NASDAQ:CDEV), Revlon Inc (NYSE:REV), and Hawaiian Holdings, Inc. (NASDAQ:HA). This group of stocks’ market caps match ATSG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MTRN 17 107442 2
CDEV 28 232973 11
REV 33 230252 2
HA 11 82372 0
Average 22.25 163260 3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $163 million. That figure was $158 million in ATSG’s case. Revlon Inc (NYSE:REV) is the most popular stock in this table. On the other hand Hawaiian Holdings, Inc. (NASDAQ:HA) is the least popular one with only 11 bullish hedge fund positions. Air Transport Services Group Inc. (NASDAQ:ATSG) 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 among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on ATSG as the stock returned 17.1% during the first two months of Q4 and outperformed the market by an even larger margin.

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

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