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Marten Transport, Ltd (MRTN): Are Hedge Funds Right About This Stock?

In this article you are going to find out whether hedge funds think Marten Transport, Ltd (NASDAQ:MRTN) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Marten Transport, Ltd (NASDAQ:MRTN) was in 16 hedge funds’ portfolios at the end of the first quarter of 2020. MRTN investors should pay attention to a decrease in support from the world’s most elite money managers lately. There were 17 hedge funds in our database with MRTN holdings at the end of the previous quarter. Our calculations also showed that MRTN 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).

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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to review the new hedge fund action encompassing Marten Transport, Ltd (NASDAQ:MRTN).

Hedge fund activity in Marten Transport, Ltd (NASDAQ:MRTN)

At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in MRTN a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MRTN A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the largest position in Marten Transport, Ltd (NASDAQ:MRTN), worth close to $10.9 million, comprising less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is 12th Street Asset Management, managed by Michael O’Keefe, which holds a $8.3 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism include Cristan Blackman’s Empirical Capital Partners, Dmitry Balyasny’s Balyasny Asset Management and Alexander Mitchell’s Scopus Asset Management. In terms of the portfolio weights assigned to each position Empirical Capital Partners allocated the biggest weight to Marten Transport, Ltd (NASDAQ:MRTN), around 13.23% of its 13F portfolio. 12th Street Asset Management is also relatively very bullish on the stock, dishing out 3.14 percent of its 13F equity portfolio to MRTN.

Since Marten Transport, Ltd (NASDAQ:MRTN) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedgies that elected to cut their full holdings heading into Q4. Intriguingly, Joel Greenblatt’s Gotham Asset Management said goodbye to the largest stake of all the hedgies watched by Insider Monkey, comprising an estimated $0.4 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also said goodbye to its stock, about $0.4 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Marten Transport, Ltd (NASDAQ:MRTN) but similarly valued. These stocks are GreenTree Hospitality Group Ltd. (NYSE:GHG), Weis Markets, Inc. (NYSE:WMK), Retail Properties of America Inc (NYSE:RPAI), and O-I Glass, Inc. (NYSE:OI). This group of stocks’ market values are similar to MRTN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GHG 4 25903 -4
WMK 12 30418 0
RPAI 20 74882 -1
OI 29 255135 9
Average 16.25 96585 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $47 million in MRTN’s case. O-I Glass, Inc. (NYSE:OI) is the most popular stock in this table. On the other hand GreenTree Hospitality Group Ltd. (NYSE:GHG) is the least popular one with only 4 bullish hedge fund positions. Marten Transport, Ltd (NASDAQ:MRTN) is not the least popular stock in this group but hedge fund interest is still below average. 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 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 13.3% in 2020 through June 25th and surpassed the market by 16.8 percentage points. Unfortunately MRTN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); MRTN investors were disappointed as the stock returned 19.7% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.