Is ODFL A Good Stock To Buy Now?

In this article we will take a look at whether hedge funds think Old Dominion Freight Line (NASDAQ:ODFL) 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.

Is ODFL a good stock to buy now? Money managers were becoming more confident. The number of long hedge fund bets advanced by 12 lately. Old Dominion Freight Line (NASDAQ:ODFL) was in 47 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. 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 for a quick look at the top 5 stocks).

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

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this cannabis tech stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s go over the new hedge fund action surrounding Old Dominion Freight Line (NASDAQ:ODFL).

Do Hedge Funds Think ODFL Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 34% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ODFL over the last 21 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Is ODFL A Good Stock To Buy?

More specifically, AQR Capital Management was the largest shareholder of Old Dominion Freight Line (NASDAQ:ODFL), with a stake worth $135.1 million reported as of the end of September. Trailing AQR Capital Management was Citadel Investment Group, which amassed a stake valued at $96.5 million. GLG Partners, Point72 Asset Management, and Renaissance Technologies 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 Shellback Capital allocated the biggest weight to Old Dominion Freight Line (NASDAQ:ODFL), around 2.52% of its 13F portfolio. Osterweis Capital Management is also relatively very bullish on the stock, designating 1.56 percent of its 13F equity portfolio to ODFL.

Now, specific money managers have jumped into Old Dominion Freight Line (NASDAQ:ODFL) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the largest position in Old Dominion Freight Line (NASDAQ:ODFL). Balyasny Asset Management had $42.9 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also initiated a $10.3 million position during the quarter. The other funds with brand new ODFL positions are Brandon Haley’s Holocene Advisors, Greg Eisner’s Engineers Gate Manager, and Jinghua Yan’s TwinBeech Capital.

Let’s also examine hedge fund activity in other stocks similar to Old Dominion Freight Line (NASDAQ:ODFL). These stocks are TD Ameritrade Holding Corp. (NYSE:AMTD), AvalonBay Communities Inc (NYSE:AVB), Realty Income Corporation (NYSE:O), EOG Resources Inc (NYSE:EOG), DraftKings Inc. (NASDAQ:DKNG), PPL Corporation (NYSE:PPL), and State Street Corporation (NYSE:STT). This group of stocks’ market caps are closest to ODFL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMTD 37 1261757 -10
AVB 29 1350013 -5
O 24 290971 7
EOG 36 619112 -9
DKNG 43 821536 -10
PPL 21 216181 -4
STT 34 493236 -2
Average 32 721829 -4.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $722 million. That figure was $788 million in ODFL’s case. DraftKings Inc. (NASDAQ:DKNG) is the most popular stock in this table. On the other hand PPL Corporation (NYSE:PPL) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Old Dominion Freight Line (NASDAQ:ODFL) is more popular among hedge funds. Our overall hedge fund sentiment score for ODFL is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on ODFL as the stock returned 16.2% since the end of September (through 12/8) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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