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Ryder System, Inc. (R): Hedge Funds Are Cashing Out

In this article we will take a look at whether hedge funds think Ryder System, Inc. (NYSE:R) 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 Ryder System, Inc. (NYSE:R) undervalued? Hedge funds are getting less bullish. The number of bullish hedge fund bets decreased by 5 recently. Our calculations also showed that R 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Richard Pzena - Pzena Investment Management

Richard S. Pzena of Pzena Investment Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s analyze the key hedge fund action regarding Ryder System, Inc. (NYSE:R).

What have hedge funds been doing with Ryder System, Inc. (NYSE:R)?

At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards R over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the most valuable position in Ryder System, Inc. (NYSE:R). Pzena Investment Management has a $95.7 million position in the stock, comprising 0.7% of its 13F portfolio. The second most bullish fund manager is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $28 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish contain Jonathan Barrett and Paul Segal’s Luminus Management, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Trellus Management Company allocated the biggest weight to Ryder System, Inc. (NYSE:R), around 1.19% of its 13F portfolio. Luminus Management is also relatively very bullish on the stock, setting aside 1.08 percent of its 13F equity portfolio to R.

Due to the fact that Ryder System, Inc. (NYSE:R) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of funds who sold off their entire stakes heading into Q4. It’s worth mentioning that Alexander Mitchell’s Scopus Asset Management sold off the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at about $31 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund cut about $27.4 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 5 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Ryder System, Inc. (NYSE:R). We will take a look at Mack Cali Realty Corp (NYSE:CLI), Meritage Homes Corp (NYSE:MTH), Hilltop Holdings Inc. (NYSE:HTH), and SailPoint Technologies Holdings, Inc. (NYSE:SAIL). This group of stocks’ market valuations are closest to R’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CLI 10 73802 -5
MTH 22 155253 -7
HTH 15 58772 -4
SAIL 21 204302 -4
Average 17 123032 -5

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $123 million. That figure was $158 million in R’s case. Meritage Homes Corp (NYSE:MTH) is the most popular stock in this table. On the other hand Mack Cali Realty Corp (NYSE:CLI) is the least popular one with only 10 bullish hedge fund positions. Ryder System, Inc. (NYSE:R) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on R as the stock returned 44% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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