Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industries and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Heartland Express, Inc. (NASDAQ:HTLD).
Heartland Express, Inc. (NASDAQ:HTLD) was in 17 hedge funds’ portfolios at the end of September. HTLD shareholders have witnessed an increase in hedge fund interest in recent months. There were 13 hedge funds in our database with HTLD holdings at the end of the previous quarter. Our calculations also showed that HTLD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
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’ 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 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 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.
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. Let’s take a peek at the key hedge fund action regarding Heartland Express, Inc. (NASDAQ:HTLD).
What have hedge funds been doing with Heartland Express, Inc. (NASDAQ:HTLD)?
Heading into the fourth quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HTLD over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Heartland Express, Inc. (NASDAQ:HTLD) was held by Renaissance Technologies, which reported holding $15.4 million worth of stock at the end of September. It was followed by Driehaus Capital with a $5.5 million position. Other investors bullish on the company included GLG Partners, Arrowstreet Capital, and D E Shaw. In terms of the portfolio weights assigned to each position, Driehaus Capital allocated the biggest weight to Heartland Express, Inc. (NASDAQ:HTLD), around 0.18% of its 13F portfolio. ExodusPoint Capital is also relatively very bullish on the stock, designating 0.03 percent of its 13F equity portfolio to HTLD.
As industrywide interest jumped, specific money managers have jumped into Heartland Express, Inc. (NASDAQ:HTLD) headfirst. Driehaus Capital, managed by Richard Driehaus, initiated the biggest position in Heartland Express, Inc. (NASDAQ:HTLD). Driehaus Capital had $5.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $1.1 million position during the quarter. The other funds with brand new HTLD positions are Dmitry Balyasny’s Balyasny Asset Management, Steve Cohen’s Point72 Asset Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s also examine hedge fund activity in other stocks similar to Heartland Express, Inc. (NASDAQ:HTLD). We will take a look at Vector Group Ltd (NYSE:VGR), Edgewell Personal Care Company (NYSE:EPC), SPX Corporation (NYSE:SPXC), and Noah Holdings Limited (NYSE:NOAH). This group of stocks’ market caps matches HTLD’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View the table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $158 million. That figure was $46 million in HTLD’s case. Noah Holdings Limited (NYSE:NOAH) is the most popular stock in this table. On the other hand, Vector Group Ltd (NYSE:VGR) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Heartland Express, Inc. (NASDAQ:HTLD) is even less popular than VGR. Hedge funds dodged a bullet by taking a bearish stance towards HTLD. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately, HTLD wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); HTLD investors were disappointed as the stock returned -0.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large-cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.