We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind let’s see whether Saia Inc (NASDAQ:SAIA) represents a good buying opportunity at the moment. Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Saia Inc (NASDAQ:SAIA) shareholders have witnessed an increase in hedge fund sentiment of late. Our calculations also showed that SAIA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the eyes of most investors, hedge funds are seen as unimportant, outdated investment tools of yesteryear. While there are over 8000 funds in operation at present, Our experts hone in on the leaders of this group, approximately 850 funds. These money managers have their hands on most of the hedge fund industry’s total capital, and by keeping track of their highest performing stock picks, Insider Monkey has come up with many investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Richard Driehaus of Driehaus Capital
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to view the new hedge fund action encompassing Saia Inc (NASDAQ:SAIA).
What does smart money think about Saia Inc (NASDAQ:SAIA)?
At the end of the fourth quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in SAIA a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Alyeska Investment Group held the most valuable stake in Saia Inc (NASDAQ:SAIA), which was worth $37.8 million at the end of the third quarter. On the second spot was Driehaus Capital which amassed $14.2 million worth of shares. Royce & Associates, Arrowstreet Capital, and Brant Point Investment Management 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 Alyeska Investment Group allocated the biggest weight to Saia Inc (NASDAQ:SAIA), around 0.53% of its 13F portfolio. Brant Point Investment Management is also relatively very bullish on the stock, earmarking 0.53 percent of its 13F equity portfolio to SAIA.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the most valuable position in Saia Inc (NASDAQ:SAIA). Arrowstreet Capital had $5.5 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also initiated a $2.5 million position during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, David Harding’s Winton Capital Management, and Cliff Asness’s AQR Capital Management.
Let’s now review hedge fund activity in other stocks similar to Saia Inc (NASDAQ:SAIA). We will take a look at Pluralsight, Inc. (NASDAQ:PS), Visteon Corp (NYSE:VC), Chart Industries, Inc. (NASDAQ:GTLS), and Newmark Group, Inc. (NASDAQ:NMRK). All of these stocks’ market caps are closest to SAIA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PS | 18 | 152506 | -4 |
| VC | 29 | 276807 | 6 |
| GTLS | 19 | 268582 | -4 |
| NMRK | 23 | 157189 | 1 |
| Average | 22.25 | 213771 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $214 million. That figure was $86 million in SAIA’s case. Visteon Corp (NYSE:VC) is the most popular stock in this table. On the other hand Pluralsight, Inc. (NASDAQ:PS) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Saia Inc (NASDAQ:SAIA) is even less popular than PS. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but managed to beat the market by 5.5 percentage points. A small number of hedge funds were also right about betting on SAIA, though not to the same extent, as the stock returned -21.3% during the same time period and outperformed the market as well.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
