Here is What Hedge Funds Think About Landstar System, Inc. (LSTR)

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Landstar System, Inc. (NASDAQ:LSTR).

Is Landstar System, Inc. (NASDAQ:LSTR) a buy right now? Prominent investors were taking an optimistic view. The number of long hedge fund bets inched up by 9 recently. Landstar System, Inc. (NASDAQ:LSTR) was in 25 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 28. Our calculations also showed that LSTR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 16 hedge funds in our database with LSTR positions at the end of the second quarter.

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. With all of this in mind we’re going to analyze the new hedge fund action surrounding Landstar System, Inc. (NASDAQ:LSTR).

Andrew Sandler of Sandler Capital Management

Do Hedge Funds Think LSTR Is A Good Stock To Buy Now?

At third quarter’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 56% from one quarter earlier. On the other hand, there were a total of 23 hedge funds with a bullish position in LSTR a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Among these funds, Royce & Associates held the most valuable stake in Landstar System, Inc. (NASDAQ:LSTR), which was worth $71.5 million at the end of the third quarter. On the second spot was Scopus Asset Management which amassed $67.9 million worth of shares. AQR Capital Management, Citadel Investment Group, and GLG Partners 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 Jade Capital Advisors allocated the biggest weight to Landstar System, Inc. (NASDAQ:LSTR), around 1.85% of its 13F portfolio. Scopus Asset Management is also relatively very bullish on the stock, setting aside 1.15 percent of its 13F equity portfolio to LSTR.

As aggregate interest increased, key money managers have been driving this bullishness. D E Shaw, managed by D. E. Shaw, initiated the most valuable position in Landstar System, Inc. (NASDAQ:LSTR). D E Shaw had $8.3 million invested in the company at the end of the quarter. Andrew Sandler’s Sandler Capital Management also made a $7 million investment in the stock during the quarter. The following funds were also among the new LSTR investors: Brandon Haley’s Holocene Advisors, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Israel Englander’s Millennium Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Landstar System, Inc. (NASDAQ:LSTR) but similarly valued. We will take a look at Ardagh Group S.A. (NYSE:ARD), Blueprint Medicines Corporation (NASDAQ:BPMC), Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC), Ardagh Metal Packaging S.A. (NYSE:AMBP), MDU Resources Group Inc (NYSE:MDU), MGM Growth Properties LLC (NYSE:MGP), and Hanesbrands Inc. (NYSE:HBI). This group of stocks’ market valuations are similar to LSTR’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $391 million. That figure was $256 million in LSTR’s case. Blueprint Medicines Corporation (NASDAQ:BPMC) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC) is the least popular one with only 3 bullish hedge fund positions. Landstar System, Inc. (NASDAQ:LSTR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LSTR is 72.3. 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. 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 still beat the market by 5.1 percentage points. Hedge funds were also right about betting on LSTR as the stock returned 11.6% since the end of Q3 (through 12/9) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.