Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Air Transport Services Group Inc. (NASDAQ:ATSG).
Air Transport Services Group Inc. (NASDAQ:ATSG) has experienced an increase in hedge fund interest lately. Air Transport Services Group Inc. (NASDAQ:ATSG) was in 23 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 19 hedge funds in our database with ATSG holdings at the end of June. Our calculations also showed that ATSG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Richard Driehaus of Driehaus Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a glance at the key hedge fund action encompassing Air Transport Services Group Inc. (NASDAQ:ATSG).
Do Hedge Funds Think ATSG Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ATSG over the last 25 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Air Transport Services Group Inc. (NASDAQ:ATSG) was held by Polar Capital, which reported holding $21.2 million worth of stock at the end of September. It was followed by Private Capital Management with a $19.7 million position. Other investors bullish on the company included Driehaus Capital, Intrinsic Edge Capital, and Mountaineer Partners Management. 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 7.02% of its 13F portfolio. Mountaineer Partners Management is also relatively very bullish on the stock, dishing out 4.78 percent of its 13F equity portfolio to ATSG.
As one would reasonably expect, key hedge funds were breaking ground themselves. Driehaus Capital, managed by Richard Driehaus, initiated the most valuable position in Air Transport Services Group Inc. (NASDAQ:ATSG). Driehaus Capital had $12.8 million invested in the company at the end of the quarter. Mark Coe’s Intrinsic Edge Capital also initiated a $10 million position during the quarter. The other funds with brand new ATSG positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Michael Gelband’s ExodusPoint Capital, and Christopher Hillary’s Roubaix Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Air Transport Services Group Inc. (NASDAQ:ATSG) but similarly valued. We will take a look at Score Media and Gaming Inc. (NASDAQ:SCR), Costamare Inc (NYSE:CMRE), Li-Cycle Holdings Corp. (NYSE:LICY), Silk Road Medical, Inc. (NASDAQ:SILK), Banner Corporation (NASDAQ:BANR), Grid Dynamics Holdings, Inc. (NASDAQ:GDYN), and Xencor Inc (NASDAQ:XNCR). This group of stocks’ market caps are closest to ATSG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SCR | 27 | 651292 | 19 |
| CMRE | 12 | 65112 | -5 |
| LICY | 28 | 290424 | 28 |
| SILK | 16 | 110886 | 3 |
| BANR | 12 | 42902 | 1 |
| GDYN | 18 | 201558 | 3 |
| XNCR | 17 | 203181 | 0 |
| Average | 18.6 | 223622 | 7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.6 hedge funds with bullish positions and the average amount invested in these stocks was $224 million. That figure was $117 million in ATSG’s case. Li-Cycle Holdings Corp. (NYSE:LICY) is the most popular stock in this table. On the other hand Costamare Inc (NYSE:CMRE) is the least popular one with only 12 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 73.4. 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 positive signal but 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately ATSG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ATSG were disappointed as the stock returned 7.9% since the end of September (through 12/9) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
