Is Knight-Swift Transportation Holdings Inc. (NYSE:KNX) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Knight-Swift Transportation Holdings Inc. (NYSE:KNX) was in 33 hedge funds’ portfolios at the end of March. KNX investors should be aware of an increase in support from the world’s most elite money managers recently. There were 26 hedge funds in our database with KNX positions at the end of the previous quarter. Our calculations also showed that knx isn’t among the 30 most popular stocks among hedge funds.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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.
Let’s check out the new hedge fund action regarding Knight-Swift Transportation Holdings Inc. (NYSE:KNX).
What does the smart money think about Knight-Swift Transportation Holdings Inc. (NYSE:KNX)?
Heading into the second quarter of 2019, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards KNX over the last 15 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Robert Bishop’s Impala Asset Management has the number one position in Knight-Swift Transportation Holdings Inc. (NYSE:KNX), worth close to $101.3 million, comprising 5.3% of its total 13F portfolio. The second largest stake is held by Luminus Management, managed by Jonathan Barrett and Paul Segal, which holds a $95.9 million position; 2.1% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish encompass Michael O’Keefe’s 12th Street Asset Management, Israel Englander’s Millennium Management and Alexander Mitchell’s Scopus Asset Management.
Now, key hedge funds were breaking ground themselves. Park West Asset Management, managed by Peter S. Park, initiated the most outsized position in Knight-Swift Transportation Holdings Inc. (NYSE:KNX). Park West Asset Management had $17.2 million invested in the company at the end of the quarter. George McCabe’s Portolan Capital Management also initiated a $8.4 million position during the quarter. The following funds were also among the new KNX investors: Philip Hempleman’s Ardsley Partners, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, and Gilchrist Berg’s Water Street Capital.
Let’s check out hedge fund activity in other stocks similar to Knight-Swift Transportation Holdings Inc. (NYSE:KNX). These stocks are Insulet Corporation (NASDAQ:PODD), Cable One Inc (NYSE:CABO), Affiliated Managers Group, Inc. (NYSE:AMG), and Gardner Denver Holdings, Inc. (NYSE:GDI). All of these stocks’ market caps resemble KNX’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $418 million. That figure was $386 million in KNX’s case. Affiliated Managers Group, Inc. (NYSE:AMG) is the most popular stock in this table. On the other hand Cable One Inc (NYSE:CABO) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Knight-Swift Transportation Holdings Inc. (NYSE:KNX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately KNX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on KNX were disappointed as the stock returned -14.2% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.