Air Transport Services Group Inc. (ATSG): Hedge Funds Are Snapping Up

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Air Transport Services Group Inc. (NASDAQ:ATSG) makes for a good investment right now.

Air Transport Services Group Inc. (NASDAQ:ATSG) was in 19 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 22. ATSG investors should pay attention to an increase in support from the world’s most elite money managers of late. There were 18 hedge funds in our database with ATSG positions at the end of the first quarter. Our calculations also showed that ATSG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Paul Marshall of Marshall Wace

Keeping this in mind let’s take a look at the fresh hedge fund action encompassing Air Transport Services Group Inc. (NASDAQ:ATSG).

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

Heading into the third quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in ATSG a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Gregg J. Powers’s Private Capital Management has the most valuable position in Air Transport Services Group Inc. (NASDAQ:ATSG), worth close to $17.6 million, comprising 2.6% of its total 13F portfolio. Coming in second is Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, which holds a $13.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish include Mark Lee’s Mountaineer Partners Management, Paul Marshall and Ian Wace’s Marshall Wace LLP and Mark Lee’s Forest Hill Capital. In terms of the portfolio weights assigned to each position Moab Capital Partners allocated the biggest weight to Air Transport Services Group Inc. (NASDAQ:ATSG), around 5.48% of its 13F portfolio. Mountaineer Partners Management is also relatively very bullish on the stock, earmarking 4.62 percent of its 13F equity portfolio to ATSG.

Consequently, specific money managers have jumped into Air Transport Services Group Inc. (NASDAQ:ATSG) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the most outsized position in Air Transport Services Group Inc. (NASDAQ:ATSG). Marshall Wace LLP had $5.1 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $1.7 million position during the quarter. The other funds with new positions in the stock are Michael O’Keefe’s 12th Street Asset Management, Gregg J. Powers’s Private Capital Management, and Aaron Wertentheil’s Jones Road Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Air Transport Services Group Inc. (NASDAQ:ATSG) but similarly valued. These stocks are Sangamo Therapeutics, Inc. (NASDAQ:SGMO), Guess’, Inc. (NYSE:GES), Cardiovascular Systems Inc (NASDAQ:CSII), M/I Homes Inc (NYSE:MHO), Immunocore Holdings plc (NASDAQ:IMCR), Industrial Logistics Properties Trust (NASDAQ:ILPT), and GCP Applied Technologies Inc. (NYSE:GCP). This group of stocks’ market caps are similar to ATSG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $158 million. That figure was $66 million in ATSG’s case. Guess’, Inc. (NYSE:GES) is the most popular stock in this table. On the other hand Industrial Logistics Properties Trust (NASDAQ:ILPT) is the least popular one with only 6 bullish hedge fund positions. Air Transport Services Group Inc. (NASDAQ:ATSG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ATSG is 66.1. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on ATSG as the stock returned 3.7% since the end of Q2 (through 10/22) 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.

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