Is KNX A Good Stock To Buy Now?

After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Knight-Swift Transportation Holdings Inc. (NYSE:KNX).

Is KNX a good stock to buy now? Investors who are in the know were betting on the stock. The number of bullish hedge fund positions increased by 13 recently. Knight-Swift Transportation Holdings Inc. (NYSE:KNX) was in 52 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 39. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that KNX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 39 hedge funds in our database with KNX holdings at the end of June.

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

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Robert Pohly of Samlyn Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let’s view the fresh hedge fund action encompassing Knight-Swift Transportation Holdings Inc. (NYSE:KNX).

How have hedgies been trading Knight-Swift Transportation Holdings Inc. (NYSE:KNX)?

At the end of September, a total of 52 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KNX over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Among these funds, D E Shaw held the most valuable stake in Knight-Swift Transportation Holdings Inc. (NYSE:KNX), which was worth $77.4 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $68 million worth of shares. Balyasny Asset Management, Millennium Management, and Impala Asset Management 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 Impala Asset Management allocated the biggest weight to Knight-Swift Transportation Holdings Inc. (NYSE:KNX), around 4.21% of its 13F portfolio. 12th Street Asset Management is also relatively very bullish on the stock, designating 3.84 percent of its 13F equity portfolio to KNX.

As industrywide interest jumped, specific money managers were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the largest position in Knight-Swift Transportation Holdings Inc. (NYSE:KNX). Arrowstreet Capital had $8.9 million invested in the company at the end of the quarter. Anthony Joseph Vaccarino’s North Fourth Asset Management also initiated a $5.7 million position during the quarter. The following funds were also among the new KNX investors: Steve Cohen’s Point72 Asset Management, Brian Scudieri’s Kehrs Ridge Capital, and Robert Pohly’s Samlyn Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Knight-Swift Transportation Holdings Inc. (NYSE:KNX) but similarly valued. These stocks are The Mosaic Company (NYSE:MOS), Cabot Oil & Gas Corporation (NYSE:COG), Tandem Diabetes Care Inc (NASDAQ:TNDM), Morningstar, Inc. (NASDAQ:MORN), UGI Corp (NYSE:UGI), Vedanta Ltd (NYSE:VEDL), and iRhythm Technologies, Inc. (NASDAQ:IRTC). All of these stocks’ market caps resemble KNX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $334 million. That figure was $618 million in KNX’s case. The Mosaic Company (NYSE:MOS) is the most popular stock in this table. On the other hand Vedanta Ltd (NYSE:VEDL) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Knight-Swift Transportation Holdings Inc. (NYSE:KNX) is more popular among hedge funds. Our overall hedge fund sentiment score for KNX is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Unfortunately KNX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on KNX were disappointed as the stock returned 1.8% since the end of the third quarter (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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