Is J.B. Hunt Transport Services, Inc. (JBHT) Going to Burn These Hedge Funds?

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) based on that data.

J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) has experienced a decrease in enthusiasm from smart money in recent months. Our calculations also showed that JBHT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 S&P 500 ETFs by more than 58 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 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 stocks that are in our short portfolio.

Donald Sussman of Paloma Partners

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a gander at the key hedge fund action surrounding J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT).

What does smart money think about J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT)?

At Q1’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards JBHT over the last 18 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Among these funds, Park Presidio Capital held the most valuable stake in J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), which was worth $55.3 million at the end of the third quarter. On the second spot was Interval Partners which amassed $51.6 million worth of shares. Citadel Investment Group, Point72 Asset Management, and Two Sigma Advisors 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 Park Presidio Capital allocated the biggest weight to J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), around 6.82% of its 13F portfolio. Interval Partners is also relatively very bullish on the stock, setting aside 3.97 percent of its 13F equity portfolio to JBHT.

Since J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) has witnessed a decline in interest from the smart money, it’s safe to say that there lies a certain “tier” of hedge funds who sold off their positions entirely last quarter. Intriguingly, Alexander Mitchell’s Scopus Asset Management dumped the biggest investment of the 750 funds tracked by Insider Monkey, totaling close to $75.5 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $9.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT). These stocks are Live Nation Entertainment, Inc. (NYSE:LYV), Korea Electric Power Corporation (NYSE:KEP), Magna International Inc. (NYSE:MGA), and Booz Allen Hamilton Holding Corporation (NYSE:BAH). This group of stocks’ market valuations match JBHT’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $586 million. That figure was $226 million in JBHT’s case. Live Nation Entertainment, Inc. (NYSE:LYV) is the most popular stock in this table. On the other hand Korea Electric Power Corporation (NYSE:KEP) is the least popular one with only 7 bullish hedge fund positions. J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on JBHT as the stock returned 29.4% during the second quarter and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.