Five Trucking Stocks Hedge Funds Are Betting On

 The fall in crude oil prices in the last one year has been a boon for consumers and various oil-dependent industries. However, those benefits haven’t trickled down to trucking companies and transportation sector as a whole. Almost all trucking stocks have fallen from a cliff this year and are on their way to end 2015 with huge losses. At the end of the last week, most trucking stocks suffered significant losses after trucking company Knight Transportation (NYSE:KNX) lowered its earning guidance for the fourth quarter. Since this recent slump has made trucking stocks considerably cheaper and attractive at current valuations, we at Insider Monkey have compiled a list of five most popular trucking stocks among the 730 hedge funds we cover. Interestingly enough, Knight Transportation (NYSE:KNX) failed to make it to our list this time around.

We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.

#5 Saia Inc (NASDAQ:SAIA)

-Hedge Funds with Long Positions (as of September 30): 20

-Aggregate Value of Hedge Funds’ Holdings (as of September 30): $163 million

Saia Inc (NASDAQ:SAIA) has lost almost 60% of its market capitalization year-to-date, with almost 25% of the decline coming in the third quarter alone. However, the popularity of the company among hedge funds has surged, as nine more funds becoming bullish on the company during the third quarter. Recently Saia Inc (NASDAQ:SAIA)’s stock fell more than 20% in a day after it reported disappointing third quarter numbers. While  analysts were expecting the company to report EPS of $0.66 on revenue of $328.44 million, it reported EPS of $0.66 on revenue of $317 million. Billionaire Israel Englander initiated a stake in Saia during the third quarter by purchasing 238,658 shares of the company.

#4 YRC Worldwide Inc (NASDAQ:YRCW)

-Hedge Funds with Long Positions (as of September 30): 27

-Aggregate Value of Hedge Funds’ Holdings (as of September 30): $213.7 million

Owing largely to the spike its stock saw after the company reported its second and third quarter results, shares of YRC Worldwide Inc (NASDAQ:YRCW) had managed to limit its year-to-date losses to 32% till last Thursday. However, the almost 10% drop it saw last Friday amid fears that most trucking companies won’t be able to meet their guidance this quarter has brought its year-to-date losses to almost 40%. The ownership of the company among funds covered by us increased 50% during the third quarter, but the aggregate value of their holdings declined by 8% during the same time. Marc Lasry‘s Avenue Capital reduced its holding in YRC Worldwide Inc (NASDAQ:YRCW) by 20% to over 5.8 million shares, but still remained the company’s largest shareholder among the funds we track at the end of September.

#3 Old Dominion Freight Line (NASDAQ:ODFL)

-Hedge Funds with Long Positions (as of September 30): 28

-Aggregate Value of Hedge Funds’ Holdings (as of September 30): $296.4 million

Moving on, Old Dominion Freight Line (NASDAQ:ODFL) has had a gradual decline this year and currently trades down 26% year-to-date. In October and November the less-than-truckload (“LTL”) tons per day for the company grew by 4.4% and 3.1% respectively year-over-year, while the LTL shipments per day saw a year-over-year increase of 9.7% and 8.7% respectively during the same months. On Monday, analysts at Evercore ISI initiated coverage on Old Dominion Freight Line (NASDAQ:ODFL)’s stock with a ‘Hold’ rating. Billionaire David E. Shaw‘s fund, D.E. Shaw, reduced its stake in the company by 9% to 412,301 shares during the July-September period.

#2 J B Hunt Transport Services Inc (NASDAQ:JBHT)

-Hedge Funds with Long Positions (as of September 30): 32

-Aggregate Value of Hedge Funds’ Holdings (as of September 30): $336.7 million

Even though its stock has declined by over 16% year-to-date, J B Hunt Transport Services Inc (NASDAQ:JBHT) has still emerged as the best performing stock in 2015 from this list. This relative resilience also explains why nine more funds became bullish on the company during the third quarter. J B Hunt Transport Services Inc (NASDAQ:JBHT) currently trades at a forward price-to-earnings multiple of 17.35 and price-to-book multiple of 6.66, which is higher than its peer group’s average. Billionaire Jim Simons‘ Renaissance Technologies made an over sixfold  increase in its stake in J B Hunt Transport Services during the third quarter to 674,654 shares.

#1 Swift Transportation Co (NYSE:SWFT)

-Hedge Funds with Long Positions (as of September 30): 38

-Aggregate Value of Hedge Funds’ Holdings (as of September 30): $268.38 million

Finally, the over 50% year-to-date decline in its stock notwithstanding, Swift Transportation Co (NYSE:SWFT) was the most popular trucking stock among hedge funds going into the fourth quarter. Amid a 33.74% drop of the stock in the third quarter, the number of funds bullish on the company increased by six, while the aggregate value of their holdings fell by $155 million. On December 2, analysts at Bank of America downgraded the stock to ‘Neutral’ from ‘Buy’ and also lowered their price target on it to $17 from $21. Revered trader Steve Cohen‘s family office Point72 Asset Management increased its stake in Swift Transportation Co (NYSE:SWFT) by 176% to over 2.5 million shares during the July-September period.

Disclosure: None