In this article we will take a look at whether hedge funds think Old Dominion Freight Line (NASDAQ:ODFL) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is ODFL a good stock to buy? The best stock pickers were in a pessimistic mood. The number of long hedge fund positions were trimmed by 10 recently. Old Dominion Freight Line (NASDAQ:ODFL) was in 40 hedge funds’ portfolios at the end of March. The all time high for this statistic is 50. Our calculations also showed that ODFL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 50 hedge funds in our database with ODFL positions at the end of the fourth quarter.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s view the latest hedge fund action regarding Old Dominion Freight Line (NASDAQ:ODFL).
Do Hedge Funds Think ODFL Is A Good Stock To Buy Now?
At the end of March, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in ODFL over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in Old Dominion Freight Line (NASDAQ:ODFL), which was worth $209.9 million at the end of the fourth quarter. On the second spot was Echo Street Capital Management which amassed $169.7 million worth of shares. Citadel Investment Group, Scopus Asset Management, and Balyasny 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 Osterweis Capital Management allocated the biggest weight to Old Dominion Freight Line (NASDAQ:ODFL), around 1.78% of its 13F portfolio. Cartenna Capital is also relatively very bullish on the stock, earmarking 1.71 percent of its 13F equity portfolio to ODFL.
Due to the fact that Old Dominion Freight Line (NASDAQ:ODFL) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there were a few hedge funds who were dropping their full holdings last quarter. Intriguingly, Renaissance Technologies said goodbye to the biggest position of the “upper crust” of funds followed by Insider Monkey, worth close to $34.6 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund cut about $22.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 10 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Old Dominion Freight Line (NASDAQ:ODFL) but similarly valued. We will take a look at Unity Software Inc. (NYSE:U), Ball Corporation (NYSE:BLL), Lennar Corporation (NYSE:LEN), Teladoc Health, Inc (NYSE:TDOC), The Kroger Co. (NYSE:KR), American Water Works Company, Inc. (NYSE:AWK), and Ameriprise Financial, Inc. (NYSE:AMP). This group of stocks’ market valuations match ODFL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| U | 39 | 6694278 | 7 |
| BLL | 38 | 1407192 | -6 |
| LEN | 49 | 1570352 | -3 |
| TDOC | 42 | 3372133 | -8 |
| KR | 35 | 3155231 | -1 |
| AWK | 30 | 1109517 | -6 |
| AMP | 37 | 969834 | 3 |
| Average | 38.6 | 2611220 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.6 hedge funds with bullish positions and the average amount invested in these stocks was $2611 million. That figure was $866 million in ODFL’s case. Lennar Corporation (NYSE:LEN) is the most popular stock in this table. On the other hand American Water Works Company, Inc. (NYSE:AWK) is the least popular one with only 30 bullish hedge fund positions. Old Dominion Freight Line (NASDAQ:ODFL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ODFL is 45.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately ODFL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ODFL were disappointed as the stock returned 5.6% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
