Here is What Hedge Funds Think About Ryder System, Inc. (R)

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 over the past few 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 hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Ryder System, Inc. (NYSE:R).

Ryder System, Inc. (NYSE:R) was in 29 hedge funds’ portfolios at the end of the third quarter of 2015. Ryder investors should be aware of a decrease in support from the world’s most elite money managers of late. There were 32 hedge funds in our database with Ryder System holdings at the end of the previous quarter. At the end of this article we will also compare Ryder System to other stocks, including FLIR Systems, Inc. (NASDAQ:FLIR), Energen Corporation (NYSE:EGN), and MAXIMUS, Inc. (NYSE:MMS) to get a better sense of its popularity.

Today there are numerous gauges investors employ to assess their stock investments. A duo of the less utilized gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the broader indices by a very impressive margin (see the details here).

With all of this in mind, we’re going to take a glance at the fresh action surrounding Ryder System, Inc. (NYSE:R).

What does the smart money think about Ryder System, Inc. (NYSE:R)?

At the Q3’s end, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Robert Bishop’s Impala Asset Management has the biggest position in Ryder System, Inc. (NYSE:R), worth close to $63.4 million, comprising 3.8% of its total 13F portfolio. Sitting at the No. 2 spot is Cliff Asness’ AQR Capital Management, with a $40.6 million position; 0.1% of its 13F portfolio is allocated to the stock. Other peers that hold long positions comprise Jonathan Barrett and Paul Segal’s Luminus Management, Daniel Bubis’ Tetrem Capital Management and Robert B. Gillam’s McKinley Capital Management.

Due to the fact that Ryder System, Inc. (NYSE:R) has faced a declination in interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of hedge funds who sold off their entire stakes in the third quarter. It’s worth mentioning that Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital dumped the largest stake of the “upper crust” of funds monitored by Insider Monkey, totaling about $44.3 million in stock. Robert Vollero and Gentry T. Beach’s fund, Vollero Beach Capital Partners, also dropped its stock, about $3.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 3 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ryder System, Inc. (NYSE:R) but similarly valued. These stocks are FLIR Systems, Inc. (NASDAQ:FLIR), Energen Corporation (NYSE:EGN), MAXIMUS, Inc. (NYSE:MMS), and Bio-Rad Laboratories, Inc. (NYSE:BIO). This group of stocks’ market values are similar to R’s market value.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $297 million. That figure was $297 million in Ryder System’s case. Bio-Rad Laboratories, Inc. (NYSE:BIO) is the most popular stock in this table with 29 funds reporting stakes as of September 30. On the other hand, MAXIMUS, Inc. (NYSE:MMS) is the least popular one with only 10 bullish hedge fund positions. Ryder System, Inc. (NYSE:R) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BIO might be a better candidate to consider a long position.