Is Old Dominion Freight Line (ODFL) Stock A Buy or Sell?

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Old Dominion Freight Line, Inc. (NASDAQ:ODFL).

Is ODFL stock a buy or sell? Old Dominion Freight Line, Inc. (NASDAQ:ODFL) was in 50 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 47. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ODFL investors should pay attention to an increase in support from the world’s most elite money managers recently. There were 47 hedge funds in our database with ODFL positions at the end of the third quarter. Our calculations also showed that ODFL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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 (or at the end of this article).Keeping this in mind we’re going to analyze the fresh hedge fund action surrounding Old Dominion Freight Line, Inc. (NASDAQ:ODFL).

Do Hedge Funds Think ODFL Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 50 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. By comparison, 34 hedge funds held shares or bullish call options in ODFL a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Among these funds, AQR Capital Management held the most valuable stake in Old Dominion Freight Line, Inc. (NASDAQ:ODFL), which was worth $162.5 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $99.8 million worth of shares. Citadel Investment Group, Echo Street Capital 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 Jade Capital Advisors allocated the biggest weight to Old Dominion Freight Line, Inc. (NASDAQ:ODFL), around 2.88% of its 13F portfolio. Cartenna Capital is also relatively very bullish on the stock, dishing out 2.19 percent of its 13F equity portfolio to ODFL.

Consequently, some big names were leading the bulls’ herd. Carlson Capital, managed by Clint Carlson, established the largest position in Old Dominion Freight Line, Inc. (NASDAQ:ODFL). Carlson Capital had $5 million invested in the company at the end of the quarter. Robert Vincent McHugh’s Jade Capital Advisors also initiated a $3.9 million position during the quarter. The following funds were also among the new ODFL investors: Peter Avellone’s Cartenna Capital, Richard Schimel and Lawrence Sapanski’s Cinctive Capital Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s check out hedge fund activity in other stocks similar to Old Dominion Freight Line, Inc. (NASDAQ:ODFL). These stocks are Garmin Ltd. (NASDAQ:GRMN), Ryanair Holdings plc (NASDAQ:RYAAY), FleetCor Technologies, Inc. (NYSE:FLT), Coca-Cola European Partners plc (NYSE:CCEP), Viatris Inc. (NASDAQ:VTRS), MPLX LP (NYSE:MPLX), and Deutsche Bank Aktiengesellschaft (NYSE:DB). All of these stocks’ market caps match ODFL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $1268 million. That figure was $891 million in ODFL’s case. Viatris Inc. (NASDAQ:VTRS) is the most popular stock in this table. On the other hand MPLX LP (NYSE:MPLX) is the least popular one with only 13 bullish hedge fund positions. Old Dominion Freight Line, Inc. (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 72.3. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on ODFL as the stock returned 18.3% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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