Hedge Funds Are Betting On Hub Group Inc (HUBG)

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 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Hub Group Inc (NASDAQ:HUBG) and determine whether the smart money was really smart about this stock.

Hub Group Inc (NASDAQ:HUBG) investors should be aware of an increase in hedge fund sentiment of late. Hub Group Inc (NASDAQ:HUBG) was in 21 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 23. There were 17 hedge funds in our database with HUBG holdings at the end of March. Our calculations also showed that HUBG isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. 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. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to take a look at the latest hedge fund action surrounding Hub Group Inc (NASDAQ:HUBG).

What have hedge funds been doing with Hub Group Inc (NASDAQ:HUBG)?

At the end of June, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HUBG over the last 20 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

Among these funds, Diamond Hill Capital held the most valuable stake in Hub Group Inc (NASDAQ:HUBG), which was worth $78.3 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $50.6 million worth of shares. Millennium Management, Arrowstreet Capital, and Renaissance Technologies 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 Coe Capital Management allocated the biggest weight to Hub Group Inc (NASDAQ:HUBG), around 0.67% of its 13F portfolio. Diamond Hill Capital is also relatively very bullish on the stock, dishing out 0.46 percent of its 13F equity portfolio to HUBG.

Consequently, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, created the biggest position in Hub Group Inc (NASDAQ:HUBG). Millennium Management had $13.5 million invested in the company at the end of the quarter. Renaissance Technologies also made a $10.6 million investment in the stock during the quarter. The following funds were also among the new HUBG investors: Dmitry Balyasny’s Balyasny Asset Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Mark Coe’s Coe Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Hub Group Inc (NASDAQ:HUBG) but similarly valued. We will take a look at SkyWest, Inc. (NASDAQ:SKYW), TransAlta Corporation (NYSE:TAC), Commscope Holding Company Inc (NASDAQ:COMM), World Fuel Services Corporation (NYSE:INT), Editas Medicine, Inc. (NASDAQ:EDIT), Medifast, Inc. (NYSE:MED), and Six Flags Entertainment Corp (NYSE:SIX). This group of stocks’ market values match HUBG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SKYW 16 83235 -2
TAC 12 51703 -3
COMM 32 416743 6
INT 18 82939 5
EDIT 22 126680 6
MED 18 441390 2
SIX 33 494437 3
Average 21.6 242447 2.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $242 million. That figure was $200 million in HUBG’s case. Six Flags Entertainment Corp (NYSE:SIX) is the most popular stock in this table. On the other hand TransAlta Corporation (NYSE:TAC) is the least popular one with only 12 bullish hedge fund positions. Hub Group Inc (NASDAQ:HUBG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HUBG is 57.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately HUBG wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); HUBG investors were disappointed as the stock returned 4.9% in the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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