In this article we will check out the progression of hedge fund sentiment towards Hub Group Inc (NASDAQ:HUBG) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Hub Group Inc (NASDAQ:HUBG) investors should pay attention to a decrease in hedge fund sentiment recently. Our calculations also showed that HUBG 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 shareholders, hedge funds are seen as slow, old financial tools of yesteryear. While there are more than 8000 funds in operation today, Our researchers look at the top tier of this club, around 850 funds. It is estimated that this group of investors administer most of all hedge funds’ total capital, and by paying attention to their unrivaled stock picks, Insider Monkey has identified many investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced 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 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 .
Ric Dillon of Diamond Hill Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 take a peek at the recent hedge fund action encompassing Hub Group Inc (NASDAQ:HUBG).
How are hedge funds trading Hub Group Inc (NASDAQ:HUBG)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HUBG over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Diamond Hill Capital held the most valuable stake in Hub Group Inc (NASDAQ:HUBG), which was worth $106.7 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $50.3 million worth of shares. Arrowstreet Capital, Royce & Associates, 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 Diamond Hill Capital allocated the biggest weight to Hub Group Inc (NASDAQ:HUBG), around 0.72% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, dishing out 0.29 percent of its 13F equity portfolio to HUBG.
Seeing as Hub Group Inc (NASDAQ:HUBG) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there exists a select few fund managers who sold off their full holdings last quarter. It’s worth mentioning that Alexander Mitchell’s Scopus Asset Management cut the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $42.1 million in stock. Richard SchimeláandáLawrence Sapanski’s fund, Cinctive Capital Management, also dumped its stock, about $5.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Hub Group Inc (NASDAQ:HUBG). We will take a look at Arvinas, Inc. (NASDAQ:ARVN), NIC Inc. (NASDAQ:EGOV), 21Vianet Group Inc (NASDAQ:VNET), and KAR Auction Services Inc (NYSE:KAR). This group of stocks’ market values match HUBG’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARVN | 25 | 431346 | -1 |
| EGOV | 17 | 105397 | -5 |
| VNET | 15 | 129811 | -1 |
| KAR | 21 | 203698 | -5 |
| Average | 19.5 | 217563 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $218 million. That figure was $191 million in HUBG’s case. Arvinas, Inc. (NASDAQ:ARVN) is the most popular stock in this table. On the other hand 21Vianet Group Inc (NASDAQ:VNET) is the least popular one with only 15 bullish hedge fund positions. Hub Group Inc (NASDAQ:HUBG) 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 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately HUBG wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); HUBG investors were disappointed as the stock returned 3.6% 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.
