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Hedge Funds Have Never Been This Bullish On Old Dominion Freight Line, Inc. (ODFL)

The latest 13F reporting period has come and gone, and 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. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Old Dominion Freight Line, Inc. (NASDAQ:ODFL) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Is Old Dominion Freight Line, Inc. (NASDAQ:ODFL) undervalued? Investors who are in the know were taking an optimistic view. The number of long hedge fund bets increased by 2 recently. Old Dominion Freight Line, Inc. (NASDAQ:ODFL) was in 35 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ODFL 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). There were 33 hedge funds in our database with ODFL holdings at the end of March.

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

In the 21st century investor’s toolkit there are tons of metrics market participants can use to analyze publicly traded companies. A pair of the best metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the best money managers can trounce their index-focused peers by a very impressive margin (see the details here).

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

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 junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are also checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Now we’re going to analyze the new hedge fund action regarding Old Dominion Freight Line, Inc. (NASDAQ:ODFL).

What have hedge funds been doing with Old Dominion Freight Line, Inc. (NASDAQ:ODFL)?

At the end of June, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ODFL over the last 20 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 Old Dominion Freight Line, Inc. (NASDAQ:ODFL) was held by AQR Capital Management, which reported holding $85.1 million worth of stock at the end of September. It was followed by Marshall Wace LLP with a $70.9 million position. Other investors bullish on the company included Luminus Management, Echo Street Capital Management, and Winton Capital Management. In terms of the portfolio weights assigned to each position Luminus Management allocated the biggest weight to Old Dominion Freight Line, Inc. (NASDAQ:ODFL), around 6.67% of its 13F portfolio. Shellback Capital is also relatively very bullish on the stock, earmarking 2.68 percent of its 13F equity portfolio to ODFL.

As one would reasonably expect, key hedge funds have jumped into Old Dominion Freight Line (NASDAQ:ODFL) headfirst. Renaissance Technologies, initiated the largest position in Old Dominion Freight Line, Inc. (NASDAQ:ODFL). Renaissance Technologies had $28.7 million invested in the company at the end of the quarter. Seth Cogswell’s Running Oak Capital also initiated a $4.6 million position during the quarter. The other funds with brand new ODFL positions are John Overdeck and David Siegel’s Two Sigma Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Jeffrey Talpins’s Element Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Old Dominion Freight Line, Inc. (NASDAQ:ODFL) but similarly valued. We will take a look at ZoomInfo Technologies Inc. (NASDAQ:ZI), PPL Corporation (NYSE:PPL), Edison International (NYSE:EIX), Wheaton Precious Metals Corp. (NYSE:WPM), Corning Incorporated (NYSE:GLW), TD Ameritrade Holding Corp. (NASDAQ:AMTD), and Deutsche Bank Aktiengesellschaft (NYSE:DB). This group of stocks’ market values resemble ODFL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ZI 24 157040 24
PPL 25 159807 -3
EIX 37 1670961 8
WPM 21 767509 -4
GLW 28 147576 -2
AMTD 47 1172699 1
DB 11 1266439 -1
Average 27.6 763147 3.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $763 million. That figure was $480 million in ODFL’s case. TD Ameritrade Holding Corp. (NASDAQ:AMTD) is the most popular stock in this table. On the other hand Deutsche Bank Aktiengesellschaft (NYSE:DB) is the least popular one with only 11 bullish hedge fund positions. Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ODFL is 70.3. 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. 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 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Hedge funds were also right about betting on ODFL as the stock returned 19.2% since Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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