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Hedge Funds Are Nibbling On Roadrunner Transportation Systems Inc (RRTS)

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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Roadrunner Transportation Systems Inc (NYSE:RRTS).

Roadrunner Transportation Systems Inc (NYSE:RRTS) shareholders have witnessed an increase in support from the world’s most elite money managers recently. Our calculations also showed that RRTS 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Singer ELLIOTT MANAGEMENT

Paul Singer of Elliott Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s review the fresh hedge fund action surrounding Roadrunner Transportation Systems Inc (NYSE:RRTS).

How are hedge funds trading Roadrunner Transportation Systems Inc (NYSE:RRTS)?

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards RRTS over the last 18 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Is RRTS A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Paul Singer’s Elliott Management has the number one position in Roadrunner Transportation Systems Inc (NYSE:RRTS), worth close to $87.1 million, accounting for 1.6% of its total 13F portfolio. Sitting at the No. 2 spot is Solas Capital Management, led by Frederick Tucker Golden, holding a $0.9 million position; 1% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism comprise Renaissance Technologies, Ken Griffin’s Citadel Investment Group and . In terms of the portfolio weights assigned to each position Elliott Management allocated the biggest weight to Roadrunner Transportation Systems Inc (NYSE:RRTS), around 1.61% of its 13F portfolio. Solas Capital Management is also relatively very bullish on the stock, setting aside 0.96 percent of its 13F equity portfolio to RRTS.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Roadrunner Transportation Systems Inc (NYSE:RRTS) headfirst. Citadel Investment Group, managed by Ken Griffin, initiated the largest position in Roadrunner Transportation Systems Inc (NYSE:RRTS). Citadel Investment Group had $0 million invested in the company at the end of the quarter.

Let’s now review hedge fund activity in other stocks similar to Roadrunner Transportation Systems Inc (NYSE:RRTS). These stocks are CRH Medical Corporation (NYSE:CRHM), Fonar Corporation (NASDAQ:FONR), Erytech Pharma S.A. (NASDAQ:ERYP), and Plumas Bancorp (NASDAQ:PLBC). This group of stocks’ market values match RRTS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CRHM 7 16880 0
FONR 9 9212 0
ERYP 2 3420 0
PLBC 2 3001 -1
Average 5 8128 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $88 million in RRTS’s case. Fonar Corporation (NASDAQ:FONR) is the most popular stock in this table. On the other hand Erytech Pharma S.A. (NASDAQ:ERYP) is the least popular one with only 2 bullish hedge fund positions. Roadrunner Transportation Systems Inc (NYSE:RRTS) is not the least popular stock in this group but hedge fund interest is still below average. 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately RRTS wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); RRTS investors were disappointed as the stock returned -16.9% during the second 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.