Is Daseke, Inc. (DSKE) Going to Burn These Hedge Funds?

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Daseke, Inc. (NASDAQ:DSKE) based on that data.

Is Daseke, Inc. (NASDAQ:DSKE) a good investment now? Investors who are in the know are becoming less hopeful. The number of bullish hedge fund bets dropped by 2 recently. Our calculations also showed that DSKE 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). DSKE was in 5 hedge funds’ portfolios at the end of March. There were 7 hedge funds in our database with DSKE holdings at the end of the previous quarter.

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

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 S&P 500 ETFs by 51 percentage points since March 2017 (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.

Ken Griffin

Ken Griffin of Citadel Investment Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the 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 peek at the key hedge fund action regarding Daseke, Inc. (NASDAQ:DSKE).

Hedge fund activity in Daseke, Inc. (NASDAQ:DSKE)

Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the previous quarter. The graph below displays the number of hedge funds with bullish position in DSKE over the last 18 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Is DSKE A Good Stock To Buy?

More specifically, Millennium Management was the largest shareholder of Daseke, Inc. (NASDAQ:DSKE), with a stake worth $0.7 million reported as of the end of September. Trailing Millennium Management was Renaissance Technologies, which amassed a stake valued at $0.5 million. Citadel Investment Group, Arrowstreet Capital, and Ionic Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ionic Capital Management allocated the biggest weight to Daseke, Inc. (NASDAQ:DSKE), around 0.02% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, earmarking 0.0016 percent of its 13F equity portfolio to DSKE.

Seeing as Daseke, Inc. (NASDAQ:DSKE) has faced declining sentiment from the smart money, we can see that there was a specific group of fund managers that elected to cut their entire stakes by the end of the first quarter. It’s worth mentioning that Paul Tudor Jones’s Tudor Investment Corp said goodbye to the biggest position of the “upper crust” of funds watched by Insider Monkey, valued at close to $0.1 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund cut about $0 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Daseke, Inc. (NASDAQ:DSKE) but similarly valued. We will take a look at Salisbury Bancorp, Inc. (NASDAQ:SAL), Meridian Bank (NASDAQ:MRBK), Flexsteel Industries, Inc. (NASDAQ:FLXS), and Geospace Technologies Corp (NASDAQ:GEOS). All of these stocks’ market caps match DSKE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SAL 1 2040 -1
MRBK 7 10798 1
FLXS 7 14977 0
GEOS 4 3823 -3
Average 4.75 7910 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $2 million in DSKE’s case. Meridian Bank (NASDAQ:MRBK) is the most popular stock in this table. On the other hand Salisbury Bancorp, Inc. (NASDAQ:SAL) is the least popular one with only 1 bullish hedge fund positions. Daseke, Inc. (NASDAQ:DSKE) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on DSKE as the stock returned 97.5% in Q2 (through the end of May) 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.