Cheap Gasoline Is Not Enough to Get Hedge Funds Into Trucking Stocks

Lower oil prices over the last two years was expected to benefit the trucking industry. However, entering into 2016, analysts were bearish on the industry as it faced more headwinds. One of the main reasons why the industry cannot capitalize on lower oil prices is the increased availability of trucks in the spot market and this is why analysts were bearish on the trucking industry at the beginning of the year.

Given the outlook for the industry, it is not surprising that hedge funds have not been particularly bullish on the sector. However, companies such as Swift Transportation Co (NYSE:SWFT), J B Hunt Transport Services Inc (NASDAQ:JBHT), Old Dominion Freight Line (NASDAQ:ODFL), YRC Worldwide Inc (NASDAQ:YRCW), and Landstar System, Inc. (NASDAQ:LSTR), still remained popular among hedge funds.

While there are many metrics that investors can assess in the investment process, hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

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Swift Transportation Co (NYSE:SWFT) saw 30 funds from our database long its shares at the end of June, down from 32 funds a quarter earlier. The total value of their holdings decreased to $380.97 million from $404.27 million, but still represented over 18% of the company’s outstanding stock. The stock gained over 11% in the first half of 2016, but it is up by more than 50% year-to-date. Last month, Swift Transportation announced that its founder and CEO Jerry Moyes would retire, effective December 31 and will be succeeded by the company’s current President and COO Richard Stocking. Moyes though will continue to serve on the company’s Board. Swift Transportation Co (NYSE:SWFT) is scheduled to release its third-quarter financial results in October 24 and analysts estimate earnings of $0.32 per share on revenue of $1.03 billion.

J B Hunt Transport Services Inc (NASDAQ:JBHT) had 28 funds tracked by us holding shares with a total value of $230.42 million at the end of the second quarter. This compares with 27 funds with stakes worth $303.04 million at the end of March. Shares of J B Hunt advanced by 10% year-to-date and are currently trading at over 21 times earnings, which is slightly higher than the industry average.  J B Hunt Transport Services Inc (NASDAQ:JBHT) is scheduled to release its third-quarter results on October 17 and the consensus among analysts is for earnings of $1.03 per share and revenue is expected to come in at $1.68 billion.

Read about three other trucking stocks that have hedge funds have a small position in on the next page.