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Here’s What Hedge Funds Think About Old Dominion Freight Line (ODFL)

“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Old Dominion Freight Line (NASDAQ:ODFL).

Old Dominion Freight Line (NASDAQ:ODFL) was in 22 hedge funds’ portfolios at the end of the third quarter of 2019. ODFL shareholders have witnessed a decrease in hedge fund sentiment of late. There were 23 hedge funds in our database with ODFL holdings at the end of the previous quarter. Our calculations also showed that ODFL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most shareholders, hedge funds are seen as slow, old financial tools of yesteryear. While there are greater than 8000 funds in operation at present, Our researchers look at the bigwigs of this group, about 750 funds. Most estimates calculate that this group of people administer the majority of the hedge fund industry’s total capital, and by watching their top picks, Insider Monkey has come up with a number of investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the latest hedge fund action surrounding Old Dominion Freight Line (NASDAQ:ODFL).

How have hedgies been trading Old Dominion Freight Line (NASDAQ:ODFL)?

At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in ODFL a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

The largest stake in Old Dominion Freight Line (NASDAQ:ODFL) was held by Osterweis Capital Management, which reported holding $17.3 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $17 million position. Other investors bullish on the company included Sirios Capital Management, Echo Street Capital Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Gobi Capital allocated the biggest weight to Old Dominion Freight Line (NASDAQ:ODFL), around 2.21% of its 13F portfolio. Osterweis Capital Management is also relatively very bullish on the stock, designating 1.26 percent of its 13F equity portfolio to ODFL.

Judging by the fact that Old Dominion Freight Line (NASDAQ:ODFL) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of hedgies that elected to cut their positions entirely last quarter. Interestingly, Alexander Mitchell’s Scopus Asset Management dropped the largest stake of all the hedgies monitored by Insider Monkey, valued at close to $31.5 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dropped about $20.8 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Old Dominion Freight Line (NASDAQ:ODFL). We will take a look at NVR, Inc. (NYSE:NVR), Wabtec Corporation (NYSE:WAB), Hologic, Inc. (NASDAQ:HOLX), and Sun Communities Inc (NYSE:SUI). This group of stocks’ market values are closest to ODFL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NVR 36 1162559 9
WAB 32 1646949 5
HOLX 33 1018180 1
SUI 15 303237 -5
Average 29 1032731 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $1033 million. That figure was $141 million in ODFL’s case. NVR, Inc. (NYSE:NVR) is the most popular stock in this table. On the other hand Sun Communities Inc (NYSE:SUI) is the least popular one with only 15 bullish hedge fund positions. Old Dominion Freight Line (NASDAQ:ODFL) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on ODFL as the stock returned 12.7% during the first two months of Q4 and outperformed the market by an even larger margin.

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

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