The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded YRC Worldwide, Inc. (NASDAQ:YRCW) based on those filings.
YRC Worldwide, Inc. (NASDAQ:YRCW) has seen a decrease in hedge fund sentiment lately. Our calculations also showed that YRCW isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most market participants, hedge funds are viewed as unimportant, outdated financial vehicles of years past. While there are greater than 8000 funds in operation at the moment, Our researchers choose to focus on the upper echelon of this group, approximately 850 funds. These hedge fund managers shepherd bulk of the hedge fund industry’s total capital, and by monitoring their best picks, Insider Monkey has identified many investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Ron Gutfleish of Elm Ridge Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s check out the recent hedge fund action encompassing YRC Worldwide, Inc. (NASDAQ:YRCW).
How have hedgies been trading YRC Worldwide, Inc. (NASDAQ:YRCW)?
At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in YRCW over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Elm Ridge Capital held the most valuable stake in YRC Worldwide, Inc. (NASDAQ:YRCW), which was worth $0.5 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $0.3 million worth of shares. OZ Management, Citadel Investment Group, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Elm Ridge Capital allocated the biggest weight to YRC Worldwide, Inc. (NASDAQ:YRCW), around 1.9% of its 13F portfolio. OZ Management is also relatively very bullish on the stock, dishing out 0.0017 percent of its 13F equity portfolio to YRCW.
Because YRC Worldwide, Inc. (NASDAQ:YRCW) has experienced declining sentiment from hedge fund managers, it’s safe to say that there exists a select few fund managers that slashed their positions entirely last quarter. Intriguingly, Renaissance Technologies said goodbye to the biggest position of all the hedgies monitored by Insider Monkey, comprising close to $1.8 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $0.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as YRC Worldwide, Inc. (NASDAQ:YRCW) but similarly valued. These stocks are FFBW, Inc. (NASDAQ:FFBW), Otonomy Inc (NASDAQ:OTIC), Lincoln Educational Services Corporation (NASDAQ:LINC), and AGBA Acquisition Limited (NASDAQ:AGBA). This group of stocks’ market values are closest to YRCW’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FFBW | 2 | 2359 | 1 |
| OTIC | 13 | 14343 | 1 |
| LINC | 6 | 20234 | 0 |
| AGBA | 4 | 2484 | 1 |
| Average | 6.25 | 9855 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $1 million in YRCW’s case. Otonomy Inc (NASDAQ:OTIC) is the most popular stock in this table. On the other hand FFBW, Inc. (NASDAQ:FFBW) is the least popular one with only 2 bullish hedge fund positions. YRC Worldwide, Inc. (NASDAQ:YRCW) is not the least popular stock in this group but hedge fund interest is still below average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately YRCW wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); YRCW investors were disappointed as the stock returned -11.9% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
