Were Hedge Funds Right About Saia Inc (SAIA)?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Saia Inc (NASDAQ:SAIA).

Hedge fund interest in Saia Inc (NASDAQ:SAIA) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SAIA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare SAIA to other stocks including Leggett & Platt, Inc. (NYSE:LEG), Brooks Automation, Inc. (NASDAQ:BRKS), and Credit Acceptance Corp. (NASDAQ:CACC) to get a better sense of its popularity.

To the average investor there are dozens of metrics market participants use to grade publicly traded companies. Two of the best metrics are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can beat the S&P 500 by a very impressive amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Now we’re going to take a glance at the latest hedge fund action regarding Saia Inc (NASDAQ:SAIA).

Do Hedge Funds Think SAIA Is A Good Stock To Buy Now?

At first quarter’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in SAIA 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.

According to Insider Monkey’s hedge fund database, Robert Joseph Caruso’s Select Equity Group has the biggest position in Saia Inc (NASDAQ:SAIA), worth close to $291.5 million, comprising 1.1% of its total 13F portfolio. The second most bullish fund manager is Ben Jacobs of Anomaly Capital Management, with a $44.7 million position; 4.4% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism encompass Dmitry Balyasny’s Balyasny Asset Management, Chuck Royce’s Royce & Associates and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Anomaly Capital Management allocated the biggest weight to Saia Inc (NASDAQ:SAIA), around 4.36% of its 13F portfolio. Select Equity Group is also relatively very bullish on the stock, earmarking 1.06 percent of its 13F equity portfolio to SAIA.

Because Saia Inc (NASDAQ:SAIA) has faced bearish sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of money managers who sold off their positions entirely by the end of the first quarter. Interestingly, Steve Cohen’s Point72 Asset Management cut the largest investment of the “upper crust” of funds watched by Insider Monkey, comprising close to $6.5 million in stock, and David Harding’s Winton Capital Management was right behind this move, as the fund cut about $1.5 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Saia Inc (NASDAQ:SAIA). We will take a look at Leggett & Platt, Inc. (NYSE:LEG), Brooks Automation, Inc. (NASDAQ:BRKS), Credit Acceptance Corp. (NASDAQ:CACC), Alcoa Corporation (NYSE:AA), LHC Group, Inc. (NASDAQ:LHCG), Chindata Group Holdings Limited (NASDAQ:CD), and Pure Storage, Inc. (NYSE:PSTG). This group of stocks’ market caps are closest to SAIA’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $454 million. That figure was $421 million in SAIA’s case. Alcoa Corporation (NYSE:AA) is the most popular stock in this table. On the other hand Chindata Group Holdings Limited (NASDAQ:CD) is the least popular one with only 9 bullish hedge fund positions. Saia Inc (NASDAQ:SAIA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SAIA is 41.1. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately SAIA wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SAIA investors were disappointed as the stock returned -10.2% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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