Swift Transportation Co (SWFT): Are Hedge Funds Right About This Stock?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Swift Transportation Co (NYSE:SWFT).

Hedge fund interest in Swift Transportation Co (NYSE:SWFT) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Press Ganey Holdings Inc (NYSE:PGND), Drew Industries, Inc. (NYSE:DW), and Joy Global Inc. (NYSE:JOY) to gather more data points.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Now, we’re going to view the key action surrounding Swift Transportation Co (NYSE:SWFT).

What have hedge funds been doing with Swift Transportation Co (NYSE:SWFT)?

Heading into the fourth quarter of 2016, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter of 2016. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Robert Bishop’s Impala Asset Management has the number one position in Swift Transportation Co (NYSE:SWFT), worth close to $79.2 million, corresponding to 5.2% of its total 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $60.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of Ken Griffin’s Citadel Investment Group, Jonathan Barrett and Paul Segal’s Luminus Management and Ken Fisher’s Fisher Asset Management.

Because Swift Transportation Co (NYSE:SWFT) has witnessed no change in sentiment from the aggregate hedge fund industry, we look at a sect of funds who sold off their full holdings by the end of the third quarter. Interestingly, Glenn J. Krevlin’s Glenhill Advisors said goodbye to the largest investment of the “upper crust” of funds watched by Insider Monkey, comprising about $32.4 million in stock. Larry Foley and Paul Farrell’s fund, Bronson Point Partners, also dumped its holding, about $4.6 million worth of SWFT shares. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Swift Transportation Co (NYSE:SWFT). These stocks are Press Ganey Holdings Inc (NYSE:PGND), Drew Industries, Inc. (NYSE:DW), Joy Global Inc. (NYSE:JOY), and WP Glimcher Inc (NYSE:WPG). This group of stocks’ market caps resemble SWFT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PGND 18 137139 3
DW 29 170687 7
JOY 21 337414 -1
WPG 13 82733 -4

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $182 million. That figure was $452 million in SWFT’s case. Drew Industries, Inc. (NYSE:DW) is the most popular stock in this table. On the other hand WP Glimcher Inc (NYSE:WPG) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Swift Transportation Co (NYSE:SWFT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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Disclosure: none.