While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors kept their optimism regarding the current bull run in the fourth quarter, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Saia Inc (NASDAQ:SAIA).
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s check out the key hedge fund action surrounding Saia Inc (NASDAQ:SAIA).
Hedge fund activity in Saia Inc (NASDAQ:SAIA)
At the end of the fourth quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the second quarter of 2018. By comparison, 20 hedge funds held shares or bullish call options in SAIA a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Saia Inc (NASDAQ:SAIA) was held by Royce & Associates, which reported holding $13 million worth of stock at the end of December. It was followed by D E Shaw with a $7.5 million position. Other investors bullish on the company included Millennium Management, Marshall Wace LLP, and GLG Partners.
Now, key money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the largest position in Saia Inc (NASDAQ:SAIA). Marshall Wace LLP had $4.1 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $2.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Joel Greenblatt’s Gotham Asset Management, Hoon Kim’s Quantinno Capital, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Saia Inc (NASDAQ:SAIA) but similarly valued. These stocks are Badger Meter, Inc. (NYSE:BMI), iKang Healthcare Group Inc (NASDAQ:KANG), Hostess Brands, Inc. (NASDAQ:TWNK), and Uxin Limited (NASDAQ:UXIN). This group of stocks’ market values are closest to SAIA’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $48 million in SAIA’s case. Hostess Brands, Inc. (NASDAQ:TWNK) is the most popular stock in this table. On the other hand Uxin Limited (NASDAQ:UXIN) is the least popular one with only 6 bullish hedge fund positions. Saia Inc (NASDAQ:SAIA) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on SAIA, though not to the same extent, as the stock returned 22.8% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.