Is USA Truck, Inc. (USAK) A Good Stock To Buy?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow over 700 of the best-performing investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is USA Truck, Inc. (NASDAQ:USAK), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

USA Truck, Inc. (NASDAQ:USAK) shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Guidance Software, Inc. (NASDAQ:GUID), Quantum Corp (NYSE:QTM), and Ultra Clean Holdings Inc (NASDAQ:UCTT) to gather more data points.

In the eyes of most stock holders, hedge funds are viewed as worthless, outdated financial tools of the past. While there are over an 8000 funds in operation today, Our experts look at the upper echelon of this club, around 700 funds. These money managers command the majority of the smart money’s total asset base, and by shadowing their best equity investments, Insider Monkey has figured out numerous investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, let’s analyze the recent action regarding USA Truck, Inc. (NASDAQ:USAK).

What have hedge funds been doing with USA Truck, Inc. (NASDAQ:USAK)?

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 14% from the second quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management has the most valuable position in USA Truck, Inc. (NASDAQ:USAK), worth close to $5.2 million, accounting for 0.7% of its total 13F portfolio. Coming in second is Claar Advisors, led by Gary Claar, holding a $4.1 million position; 2.3% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish encompass Jim Simons’ Renaissance Technologies, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors and Cliff Asness’ AQR Capital Management.

Because USA Truck, Inc. (NASDAQ:USAK) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of hedgies that decided to sell off their full holdings last quarter. Interestingly, Peter S. Park’s Park West Asset Management sold off the biggest investment of the “upper crust” of funds tracked by Insider Monkey, worth close to $3.4 million in stock, and Julian Robertson’s Tiger Management was right behind this move, as the fund cut about $2.2 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as USA Truck, Inc. (NASDAQ:USAK) but similarly valued. These stocks are Guidance Software, Inc. (NASDAQ:GUID), Quantum Corp (NYSE:QTM), Ultra Clean Holdings Inc (NASDAQ:UCTT), and Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS). This group of stocks’ market caps match USAK’s market cap.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $46 million, compared to $18 million in USAK’s case. Ultra Clean Holdings Inc (NASDAQ:UCTT) is the most popular stock in this table, while Guidance Software, Inc. (NASDAQ:GUID) is the least popular one with only 11 bullish hedge fund positions. USA Truck, Inc. (NASDAQ:USAK) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard UCTT might be a better candidate to consider a long position.