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 (read our latest 10 coronavirus predictions).
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 take a look at whether J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) a buy here? Hedge funds are taking a bullish view. The number of bullish hedge fund bets inched up by 2 lately. Our calculations also showed that JBHT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). JBHT was in 28 hedge funds’ portfolios at the end of December. There were 26 hedge funds in our database with JBHT positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are viewed as slow, outdated investment vehicles of yesteryear. While there are over 8000 funds trading at present, Our researchers choose to focus on the top tier of this club, approximately 850 funds. These investment experts preside over the majority of all hedge funds’ total asset base, and by shadowing their finest equity investments, Insider Monkey has spotted many investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum 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 .
Jim Simons of Renaissance Technologies
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. Now we’re going to take a look at the new hedge fund action regarding J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT).
How are hedge funds trading J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT)?
At the end of the fourth quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the third quarter of 2019. By comparison, 25 hedge funds held shares or bullish call options in JBHT a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) was held by Scopus Asset Management, which reported holding $75.5 million worth of stock at the end of September. It was followed by Park Presidio Capital with a $64.2 million position. Other investors bullish on the company included Renaissance Technologies, Two Sigma Advisors, and Interval Partners. In terms of the portfolio weights assigned to each position Park Presidio Capital allocated the biggest weight to J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), around 7.15% of its 13F portfolio. Empirical Capital Partners is also relatively very bullish on the stock, dishing out 4.48 percent of its 13F equity portfolio to JBHT.
Consequently, specific money managers were leading the bulls’ herd. Gotham Asset Management, managed by Joel Greenblatt, assembled the biggest position in J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT). Gotham Asset Management had $8.2 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $4.1 million position during the quarter. The following funds were also among the new JBHT investors: Paul Tudor Jones’s Tudor Investment Corp, David Harding’s Winton Capital Management, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) but similarly valued. We will take a look at Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), Raymond James Financial, Inc. (NYSE:RJF), Slack Technologies Inc (NYSE:WORK), and Ubiquiti Inc. (NYSE:UI). This group of stocks’ market caps are closest to JBHT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NCLH | 38 | 1090154 | 4 |
| RJF | 28 | 750978 | -1 |
| WORK | 29 | 294837 | 0 |
| UI | 25 | 301453 | 6 |
| Average | 30 | 609356 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30 hedge funds with bullish positions and the average amount invested in these stocks was $609 million. That figure was $322 million in JBHT’s case. Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) is the most popular stock in this table. On the other hand Ubiquiti Inc. (NYSE:UI) is the least popular one with only 25 bullish hedge fund positions. J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) 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 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 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately JBHT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); JBHT investors were disappointed as the stock returned -35.3% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.
