Is Heartland Express, Inc. (HTLD) Going to Burn These Hedge Funds?

Is Heartland Express, Inc. (NASDAQ:HTLD) the right pick for your portfolio? Hedge funds are taking a bullish view. The number of bullish hedge fund bets rose by 4 in recent months.

In the eyes of most market participants, hedge funds are assumed to be unimportant, outdated investment vehicles of years past. While there are greater than 8000 funds with their doors open today, we choose to focus on the upper echelon of this group, about 450 funds. Most estimates calculate that this group oversees the lion’s share of the smart money’s total asset base, and by watching their top stock picks, we have deciphered a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as important, bullish insider trading sentiment is a second way to break down the stock market universe. Just as you’d expect, there are many motivations for an upper level exec to sell shares of his or her company, but only one, very clear reason why they would buy. Several academic studies have demonstrated the market-beating potential of this method if “monkeys” know what to do (learn more here).

Consequently, it’s important to take a look at the recent action surrounding Heartland Express, Inc. (NASDAQ:HTLD).

How have hedgies been trading Heartland Express, Inc. (NASDAQ:HTLD)?

At the end of the first quarter, a total of 20 of the hedge funds we track were bullish in this stock, a change of 25% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their holdings meaningfully.

According to our comprehensive database, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC had the largest position in Heartland Express, Inc. (NASDAQ:HTLD), worth close to $23.9 million, comprising 0.3% of its total 13F portfolio. On First Pacific Advisors LLC’s heels is Chuck Royce of Royce & Associates, with a $9.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers with similar optimism include Israel Englander’s Millennium Management, John Fichthorn’s Dialectic Capital Management and Andrew Sandler’s Sandler Capital Management.

As one would reasonably expect, specific money managers have been driving this bullishness. First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, created the biggest position in Heartland Express, Inc. (NASDAQ:HTLD). First Pacific Advisors LLC had 23.9 million invested in the company at the end of the quarter. Andrew Sandler’s Sandler Capital Management also made a $3.6 million investment in the stock during the quarter. The other funds with brand new HTLD positions are D. E. Shaw’s D E Shaw, Ken Brodkowitz and Mike Vermut’s Newland Capital, and Matthew Tewksbury’s Stevens Capital Management.

How have insiders been trading Heartland Express, Inc. (NASDAQ:HTLD)?

Insider buying is most useful when the primary stock in question has experienced transactions within the past half-year. Over the last six-month time period, Heartland Express, Inc. (NASDAQ:HTLD) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Heartland Express, Inc. (NASDAQ:HTLD). These stocks are Swift Transportation Co (NYSE:SWFT), Con-way Inc (NYSE:CNW), Universal Truckload Services, Inc. (NASDAQ:UACL), Werner Enterprises, Inc. (NASDAQ:WERN), and Knight Transportation (NYSE:KNX). This group of stocks belong to the trucking industry and their market caps are closest to HTLD’s market cap.

With the results demonstrated by our tactics, retail investors must always watch hedge fund and insider trading sentiment, and Heartland Express, Inc. (NASDAQ:HTLD) shareholders fit into this picture quite nicely.

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