Legendary investors such as Jeffrey Talpins and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Echo Global Logistics, Inc. (NASDAQ:ECHO) from the perspective of those elite funds.
Echo Global Logistics, Inc. (NASDAQ:ECHO) has experienced an increase in activity from the world’s largest hedge funds recently. ECHO was in 15 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 14 hedge funds in our database with ECHO holdings at the end of the previous quarter. Our calculations also showed that ECHO isn’t among the 30 most popular stocks among hedge funds.
If you’d ask most stock holders, hedge funds are perceived as worthless, old investment tools of years past. While there are over 8000 funds trading today, We look at the upper echelon of this club, approximately 750 funds. These investment experts administer the majority of all hedge funds’ total capital, and by following their inimitable equity investments, Insider Monkey has unearthed various investment strategies that have historically beaten the market. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by nearly 5 percentage points per annum since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
We’re going to check out the key hedge fund action surrounding Echo Global Logistics, Inc. (NASDAQ:ECHO).
What have hedge funds been doing with Echo Global Logistics, Inc. (NASDAQ:ECHO)?
Heading into the first quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ECHO over the last 14 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Echo Global Logistics, Inc. (NASDAQ:ECHO) was held by Renaissance Technologies, which reported holding $6.5 million worth of stock at the end of December. It was followed by Millennium Management with a $2.4 million position. Other investors bullish on the company included PDT Partners, Marshall Wace LLP, and Algert Coldiron Investors.
As one would reasonably expect, key hedge funds were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most outsized position in Echo Global Logistics, Inc. (NASDAQ:ECHO). Marshall Wace LLP had $2.3 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $0.6 million investment in the stock during the quarter. The following funds were also among the new ECHO investors: Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Minhua Zhang’s Weld Capital Management, and David Costen Haley’s HBK Investments.
Let’s also examine hedge fund activity in other stocks similar to Echo Global Logistics, Inc. (NASDAQ:ECHO). We will take a look at Customers Bancorp Inc (NYSE:CUBI), Axcelis Technologies Inc (NASDAQ:ACLS), Bank of Marin Bancorp (NASDAQ:BMRC), and Preferred Apartment Communities Inc. (NYSEAMEX:APTS). All of these stocks’ market caps are similar to ECHO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CUBI | 15 | 32362 | 6 |
| ACLS | 9 | 66860 | -4 |
| BMRC | 6 | 20250 | -1 |
| APTS | 2 | 547 | -1 |
| Average | 8 | 30005 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $24 million in ECHO’s case. Customers Bancorp Inc (NYSE:CUBI) is the most popular stock in this table. On the other hand Preferred Apartment Communities Inc. (NYSEAMEX:APTS) is the least popular one with only 2 bullish hedge fund positions. Echo Global Logistics, Inc. (NASDAQ:ECHO) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on ECHO, though not to the same extent, as the stock returned 22.7% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
