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Is Schneider National, Inc. (SNDR) Going to Burn These Hedge Funds?

It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 7% during October and average hedge fund losing about 3%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by about 4 percentage points during the first half of Q4, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Schneider National, Inc. (NYSE:SNDR) during the quarter below.

Schneider National, Inc. (NYSE:SNDR) has experienced an increase in hedge fund interest lately. Our calculations also showed that SNDR isn’t among the 30 most popular stocks among hedge funds.

To most traders, hedge funds are viewed as underperforming, outdated financial vehicles of yesteryear. While there are over 8,000 funds trading today, Our experts hone in on the aristocrats of this club, around 700 funds. These investment experts shepherd the majority of the smart money’s total capital, and by paying attention to their unrivaled stock picks, Insider Monkey has figured out a number of investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by 6 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.

CITADEL INVESTMENT GROUP

We’re going to review the new hedge fund action surrounding Schneider National, Inc. (NYSE:SNDR).

How are hedge funds trading Schneider National, Inc. (NYSE:SNDR)?

At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in SNDR over the last 13 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

SNDR_dec2018

More specifically, Millennium Management was the largest shareholder of Schneider National, Inc. (NYSE:SNDR), with a stake worth $25.9 million reported as of the end of September. Trailing Millennium Management was Two Sigma Advisors, which amassed a stake valued at $13.6 million. Renaissance Technologies, Scopus Asset Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Hudson Bay Capital Management, managed by Sander Gerber, initiated the most outsized position in Schneider National, Inc. (NYSE:SNDR). Hudson Bay Capital Management had $2.6 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also made a $2.1 million investment in the stock during the quarter. The following funds were also among the new SNDR investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Paul Tudor Jones’s Tudor Investment Corp, and Ken Griffin’s Citadel Investment Group.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Schneider National, Inc. (NYSE:SNDR) but similarly valued. These stocks are Gramercy Property Trust Inc (NYSE:GPT), Radian Group Inc (NYSE:RDN), Thor Industries, Inc. (NYSE:THO), and American Eagle Outfitters Inc. (NYSE:AEO). This group of stocks’ market valuations are closest to SNDR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GPT 21 875563 2
RDN 24 204439 4
THO 28 377541 -4
AEO 26 325532 -5
Average 24.75 445769 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $446 million. That figure was $105 million in SNDR’s case. Thor Industries, Inc. (NYSE:THO) is the most popular stock in this table. On the other hand Gramercy Property Trust Inc (NYSE:GPT) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Schneider National, Inc. (NYSE:SNDR) is even less popular than GPT. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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

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