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How Hedge Funds Traded Patriot Transportation Holding Inc (PATI) During The Crash

In this article we will take a look at whether hedge funds think Patriot Transportation Holding Inc (NASDAQ:PATI) is 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, unconventional data sources, 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.

Hedge fund interest in Patriot Transportation Holding Inc (NASDAQ:PATI) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Lifeway Foods, Inc. (NASDAQ:LWAY), Evogene Ltd. (NASDAQ:EVGN), and Exela Technologies, Inc. (NASDAQ:XELA) to gather more data points. Our calculations also showed that PATI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

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

According to most investors, hedge funds are viewed as worthless, old financial tools of the past. While there are over 8000 funds with their doors open today, Our researchers choose to focus on the masters of this group, about 850 funds. These money managers handle bulk of the hedge fund industry’s total asset base, and by shadowing their unrivaled picks, Insider Monkey has identified a few investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Jeffrey Bronchick - Cove Street Capital

Jeffrey Bronchick of Cove Street Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a look at the new hedge fund action regarding Patriot Transportation Holding Inc (NASDAQ:PATI).

How are hedge funds trading Patriot Transportation Holding Inc (NASDAQ:PATI)?

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. By comparison, 3 hedge funds held shares or bullish call options in PATI a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

The largest stake in Patriot Transportation Holding Inc (NASDAQ:PATI) was held by Minerva Advisors, which reported holding $2.4 million worth of stock at the end of September. It was followed by Royce & Associates with a $1.8 million position. The only other hedge fund that is bullish on the company was Cove Street Capital.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Patriot Transportation Holding Inc (NASDAQ:PATI) but similarly valued. We will take a look at Lifeway Foods, Inc. (NASDAQ:LWAY), Evogene Ltd. (NASDAQ:EVGN), Exela Technologies, Inc. (NASDAQ:XELA), and T.A.T. Technologies Ltd. (NASDAQ:TATT). This group of stocks’ market caps match PATI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LWAY 3 901 0
EVGN 2 820 0
XELA 7 7604 1
TATT 1 732 0
Average 3.25 2514 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.25 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $4 million in PATI’s case. Exela Technologies, Inc. (NASDAQ:XELA) is the most popular stock in this table. On the other hand T.A.T. Technologies Ltd. (NASDAQ:TATT) is the least popular one with only 1 bullish hedge fund positions. Patriot Transportation Holding Inc (NASDAQ:PATI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 7.9% in 2020 through May 22nd and surpassed the market by 15.6 percentage points. Unfortunately PATI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); PATI investors were disappointed as the stock returned -5.6% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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