We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Expeditors International of Washington (NASDAQ:EXPD).
Expeditors International of Washington (NASDAQ:EXPD) investors should pay attention to a decrease in activity from the world’s largest hedge funds of late. EXPD was in 27 hedge funds’ portfolios at the end of December. There were 30 hedge funds in our database with EXPD holdings at the end of the previous quarter. Our calculations also showed that EXPD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to go over the key hedge fund action surrounding Expeditors International of Washington (NASDAQ:EXPD).
How have hedgies been trading Expeditors International of Washington (NASDAQ:EXPD)?
Heading into the first quarter of 2020, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in EXPD over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Select Equity Group was the largest shareholder of Expeditors International of Washington (NASDAQ:EXPD), with a stake worth $51.3 million reported as of the end of September. Trailing Select Equity Group was AQR Capital Management, which amassed a stake valued at $46.4 million. Tensile Capital, D E Shaw, and Renaissance Technologies 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 Tensile Capital allocated the biggest weight to Expeditors International of Washington (NASDAQ:EXPD), around 4.21% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, dishing out 0.58 percent of its 13F equity portfolio to EXPD.
Since Expeditors International of Washington (NASDAQ:EXPD) has experienced a decline in interest from hedge fund managers, it’s safe to say that there were a few fund managers that slashed their positions entirely heading into Q4. Interestingly, Dmitry Balyasny’s Balyasny Asset Management sold off the largest stake of the 750 funds followed by Insider Monkey, totaling close to $12.6 million in stock. Ran Pang’s fund, Quantamental Technologies, also cut its stock, about $0.9 million worth. These moves are interesting, as total hedge fund interest was cut by 3 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Expeditors International of Washington (NASDAQ:EXPD) but similarly valued. We will take a look at Suzano S.A. (NYSE:SUZ), The AES Corporation (NYSE:AES), BanColombia S.A. (NYSE:CIB), and Alliant Energy Corporation (NASDAQ:LNT). This group of stocks’ market values are closest to EXPD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SUZ | 4 | 40305 | 0 |
| AES | 27 | 694739 | 0 |
| CIB | 14 | 214226 | 3 |
| LNT | 28 | 560221 | 5 |
| Average | 18.25 | 377373 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $377 million. That figure was $290 million in EXPD’s case. Alliant Energy Corporation (NASDAQ:LNT) is the most popular stock in this table. On the other hand Suzano S.A. (NYSE:SUZ) is the least popular one with only 4 bullish hedge fund positions. Expeditors International of Washington (NASDAQ:EXPD) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but still beat the market by 3.2 percentage points. Hedge funds were also right about betting on EXPD, though not to the same extent, as the stock returned -24.7% during the first two and a half months of 2020 (through March 16th) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
