Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Schneider National, Inc. (NYSE:SNDR) to find out whether there were any major changes in hedge funds’ views.
Is SNDR a good stock to buy now? Money managers were getting less bullish. The number of bullish hedge fund bets were cut by 2 in recent months. Schneider National, Inc. (NYSE:SNDR) was in 15 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 22. Our calculations also showed that SNDR 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. With all of this in mind we’re going to take a look at the key hedge fund action encompassing Schneider National, Inc. (NYSE:SNDR).
Do Hedge Funds Think SNDR Is A Good Stock To Buy Now?
At third quarter’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in SNDR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
The largest stake in Schneider National, Inc. (NYSE:SNDR) was held by AQR Capital Management, which reported holding $39.5 million worth of stock at the end of September. It was followed by Select Equity Group with a $25 million position. Other investors bullish on the company included Arrowstreet Capital, Renaissance Technologies, and Intrinsic Edge Capital. In terms of the portfolio weights assigned to each position Intrinsic Edge Capital allocated the biggest weight to Schneider National, Inc. (NYSE:SNDR), around 0.87% of its 13F portfolio. Select Equity Group is also relatively very bullish on the stock, earmarking 0.12 percent of its 13F equity portfolio to SNDR.
Since Schneider National, Inc. (NYSE:SNDR) has experienced bearish sentiment from the smart money, logic holds that there lies a certain “tier” of hedge funds that slashed their positions entirely by the end of the third quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management sold off the biggest position of the 750 funds tracked by Insider Monkey, valued at about $12.6 million in stock, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management was right behind this move, as the fund cut about $3.5 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Schneider National, Inc. (NYSE:SNDR) but similarly valued. We will take a look at Jamf Holding Corp. (NASDAQ:JAMF), People’s United Financial, Inc. (NASDAQ:PBCT), Eaton Vance Corp (NYSE:EV), Kemper Corporation (NYSE:KMPR), Vir Biotechnology, Inc. (NASDAQ:VIR), Plains All American Pipeline, L.P. (NYSE:PAA), and Everbridge, Inc. (NASDAQ:EVBG). All of these stocks’ market caps resemble SNDR’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $224 million. That figure was $142 million in SNDR’s case. Everbridge, Inc. (NASDAQ:EVBG) is the most popular stock in this table. On the other hand Vir Biotechnology, Inc. (NASDAQ:VIR) is the least popular one with only 6 bullish hedge fund positions. Schneider National, Inc. (NYSE:SNDR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SNDR is 42.2. 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. 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 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 gained 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately SNDR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); SNDR investors were disappointed as the stock returned -9.8% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.