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Were Hedge Funds Right About J.B. Hunt Transport Services, Inc. (JBHT)?

Hedge funds don’t get the respect they used to get. Nowadays investors prefer passive funds over actively managed funds. One thing they don’t realize is that 100% of the passive funds didn’t see the coronavirus recession coming, but a lot of hedge funds did. Even we published an article near the end of February and predicted a US recession. Think about all the losses you could have avoided if you sold your shares in February and bought them back at the end of March. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is a good investment right now.

Is J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) going to take off soon? The smart money is in an optimistic mood. The number of bullish hedge fund positions advanced by 2 recently. Our calculations also showed that JBHT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). JBHT was in 28 hedge funds’ portfolios at the end of December. There were 26 hedge funds in our database with JBHT positions at the end of the previous quarter.

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 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 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.

Michael Platt Bluecrest Capital Management

Michael Platt of BlueCrest Capital Mgmt.

We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with 77% accuracy, so we check out his stock picks. A former hedge fund manager is pitching the “next Amazon” in this video; again we are listening. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a peek at the recent hedge fund action encompassing J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT).

How have hedgies been trading J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT)?

At Q4’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. By comparison, 25 hedge funds held shares or bullish call options in JBHT a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Scopus Asset Management held the most valuable stake in J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), which was worth $75.5 million at the end of the third quarter. On the second spot was Park Presidio Capital which amassed $64.2 million worth of shares. Renaissance Technologies, Two Sigma Advisors, and Interval Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Park Presidio Capital allocated the biggest weight to J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), around 7.15% of its 13F portfolio. Empirical Capital Partners is also relatively very bullish on the stock, dishing out 4.48 percent of its 13F equity portfolio to JBHT.

As one would reasonably expect, specific money managers were breaking ground themselves. Gotham Asset Management, managed by Joel Greenblatt, established the most valuable position in J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT). Gotham Asset Management had $8.2 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $4.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, David Harding’s Winton Capital Management, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..

Let’s now review hedge fund activity in other stocks similar to J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT). These stocks are Norwegian Cruise Line Holdings Ltd (NYSE:NCLH), Raymond James Financial, Inc. (NYSE:RJF), Slack Technologies Inc (NYSE:WORK), and Ubiquiti Inc. (NYSE:UI). All of these stocks’ market caps match JBHT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NCLH 38 1090154 4
RJF 28 750978 -1
WORK 29 294837 0
UI 25 301453 6
Average 30 609356 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $609 million. That figure was $322 million in JBHT’s case. Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) is the most popular stock in this table. On the other hand Ubiquiti Inc. (NYSE:UI) is the least popular one with only 25 bullish hedge fund positions. J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) 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 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. Unfortunately JBHT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); JBHT investors were disappointed as the stock returned -13.4% during the same time period 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.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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