Insider Monkey finished processing more than 700 13F filings made by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th. In this article we are going to take a look at smart money sentiment towards Echo Global Logistics, Inc. (NASDAQ:ECHO).
Echo Global Logistics, Inc. (NASDAQ:ECHO) has seen a decrease in hedge fund sentiment lately. ECHO was in 14 hedge funds’ portfolios at the end of September. There were 18 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to go over the new hedge fund action surrounding Echo Global Logistics, Inc. (NASDAQ:ECHO).
Hedge fund activity in Echo Global Logistics, Inc. (NASDAQ:ECHO)
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -22% from the second quarter of 2018. On the other hand, there were a total of 18 hedge funds with a bullish position in ECHO at the beginning of this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Jim Simons’s Renaissance Technologies has the biggest position in Echo Global Logistics, Inc. (NASDAQ:ECHO), worth close to $11.1 million, accounting for less than 0.1%% of its total 13F portfolio. On Renaissance Technologies’s heels is Richard Driehaus of Driehaus Capital, with a $11.1 million position; 0.3% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish consist of Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Peter Muller’s PDT Partners.
Seeing as Echo Global Logistics, Inc. (NASDAQ:ECHO) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedgies who were dropping their full holdings by the end of the third quarter. It’s worth mentioning that Peter Schliemann’s Rutabaga Capital Management sold off the largest stake of the 700 funds tracked by Insider Monkey, valued at an estimated $8.4 million in stock, and Brandon Osten’s Venator Capital Management was right behind this move, as the fund dropped about $2.2 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 4 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Echo Global Logistics, Inc. (NASDAQ:ECHO) but similarly valued. These stocks are American Railcar Industries, Inc. (NASDAQ:ARII), Comstock Resources Inc (NYSE:CRK), Cray Inc. (NASDAQ:CRAY), and ViewRay, Inc. (NASDAQ:VRAY). This group of stocks’ market values resemble ECHO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARII | 13 | 567890 | 1 |
| CRK | 5 | 7315 | -2 |
| CRAY | 13 | 59641 | 0 |
| VRAY | 23 | 322894 | 10 |
| Average | 13.5 | 239435 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $239 million. That figure was $43 million in ECHO’s case. ViewRay, Inc. (NASDAQ:VRAY) is the most popular stock in this table. On the other hand Comstock Resources Inc (NYSE:CRK) is the least popular one with only 5 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard VRAY might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
