Is Old Dominion Freight Line, Inc. (NASDAQ:ODFL) A Good Stock To Buy?

Insider Monkey finished processing more than 700 13F filings made by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th. What do these smart investors think about Old Dominion Freight Line, Inc. (NASDAQ:ODFL)?

Old Dominion Freight Line, Inc. (NASDAQ:ODFL) has experienced an increase in enthusiasm from smart money lately. ODFL was in 24 hedge funds’ portfolios at the end of the third quarter of 2018, up from 20 at the end of the previous quarter. Even though smart money investors are slowly becoming more bullish on Old Dominion Freight Line, Inc. the stock is still far away from being the favorite one (and if you are interested to see which stocks hedge funds are piling on, take a look at the list of 30 most popular stocks among hedge funds in Q3 of 2018).

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 flagship best performing hedge funds strategy returned 17.4% year to date and outperformed the market by more than 14 percentage points this year. This strategy also outperformed the market by 3 percentage points in the fourth quarter despite the market volatility (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

AQR CAPITAL MANAGEMENT

We tried to collect enough information about Old Dominion Freight Line, Inc. (NASDAQ:ODFL) to be able to determine whether this stock is worth buying or not. While researching we found this RiverPark – Wedgewood Fund’ third quarter 2018 report, in which, among other things, RiverPark shares its views on the company, we bring you one part of it:

Old Dominion Freight Line has been a family run business for decades. Old Dominion was founded in 1934 in Richmond, Virginia by Earl and Lillian Congdon, running a single truck between Richmond and Norfolk. The founding year was fortuitous as the U.S. economy was in the early innings of its slow recovery from the Great Depression. During the first half of the 1940s, in combination new congressional industry regulations, and World War II armament spending, the trucking industry boomed. In the early 1950s, Earl Sr. passed, and his wife Lillian ran the Company with sons Earl, Jr. and Jack. In 1962 Earl, Jr. became President. In 1962 the Company moved to High Point, NC. The Company went public in 1991. In 1998, David Congdon (grandson of Company founders) is named President and Chief Operating Officer. In March 2018, Greg Gantt, a 24-year Company veteran was named President and COO while David Congdon becomes Vice Chairman of the Board and CEO.

In the ensuing decades, organic market expansion was complemented by acquisitions of Bottoms- Fiske Truck Line (1957), Barnes truck Line, Nilsson Motor Express and White Transport (1969), Star Transport (1972), Deaton Trucking (1979) and Carter and Sons Trucking (2001). Since 2006, trucking and transport assets were purchased from Wichita Southeast Kansas Transit, Priority Freight Line, Bullocks Express Transportation, and Bob’s Pickup.

According to the Company, more than 97% of the Company’s revenue has historically been derived from transporting LTL shipments for their customers, whose demand for their services is generally tied to industrial production and the overall health of the U.S. domestic economy. The Company is currently the third largest LTL motor carrier in the United States, as measured by 2017 revenue with 10% of the LTL market.

The growth in demand for the Company’s services can be attributed to their ability to consistently provide a superior level of customer service at a fair price, which allows customers to meet their supply chain needs. Integrated structure provides customers with consistently high-quality service from origin to destination, and operating structure and proprietary information systems enable efficient management of operating costs.

As of December 31, 2017, the Company reports that they operate 228 service center locations, of which they owned 194 and leased 34. Their network includes ten major breakbulk facilities located in Rialto, CA; Atlanta, GA; Columbus, OH; Indianapolis, IN; Greensboro, NC; Harrisburg, PA; Memphis and Morristown, TN; Dallas, TX; and Salt Lake City, UT. Service centers are strategically located throughout the country to provide the highest quality service and minimize freight rehandling costs.

According to the Company, as of December 31, 2017, the Company owned 8,316 tractors. They generally use new tractors in linehaul operations (movement of cargo between two major cities or ports, especially those more than 1,000 miles apart) for approximately three to five years and then transfer those tractors to P&D operations for the remainder of their useful lives. In many service centers, tractors perform P&D functions during the day and linehaul functions at night to maximize tractor utilization. The Company employed 19,183 individuals full-time, none of whom were represented under a collective bargaining agreement. Full-time employees work in the following roles: Drivers 10,187, Platform 3,443, Fleet technicians 557, Sales, administrative and other 4,996. Total: 19,183. The Company employed 5,311 linehaul drivers and 4,876 P&D drivers full-time. They select drivers primarily based on safe driving records and experience.”

On the next page you can read few more paragraphs from RiverParks’ report, as well as our further analysis of the company.