Should You Avoid Air Transport Services Group Inc. (ATSG)? – Hub Group Inc (HUBG), Forward Air Corporation (FWRD)

Air Transport Services Group Inc. (NASDAQ:ATSG) was in 10 hedge funds’ portfolio at the end of the fourth quarter of 2012. ATSG investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. There were 11 hedge funds in our database with ATSG positions at the end of the previous quarter.

If you’d ask most traders, hedge funds are seen as underperforming, outdated financial tools of the past. While there are more than 8000 funds in operation today, we at Insider Monkey look at the aristocrats of this club, about 450 funds. Most estimates calculate that this group controls most of the smart money’s total capital, and by tracking their top investments, we have deciphered a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Just as beneficial, positive insider trading activity is a second way to parse down the stock market universe. Obviously, there are lots of incentives for an insider to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this strategy if “monkeys” know what to do (learn more here).

Consequently, it’s important to take a glance at the key action regarding Air Transport Services Group Inc. (NASDAQ:ATSG).

How have hedgies been trading Air Transport Services Group Inc. (NASDAQ:ATSG)?

Heading into 2013, a total of 10 of the hedge funds we track were bullish in this stock, a change of -9% from one quarter earlier. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes substantially.

According to our comprehensive database, Phil Frohlich’s Prescott Group Capital Management had the largest position in Air Transport Services Group Inc. (NASDAQ:ATSG), worth close to $23.2 million, comprising 6% of its total 13F portfolio. Sitting at the No. 2 spot is Gregg J. Powers of Private Capital Management, with a $11.3 million position; 1.1% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include Jay Petschek and Steven Major’s Corsair Capital Management, Cliff Asness’s AQR Capital Management and Andy Redleaf’s Whitebox Advisors.

Seeing as Air Transport Services Group Inc. (NASDAQ:ATSG) has faced falling interest from hedge fund managers, we can see that there were a few money managers that slashed their positions entirely last quarter. Interestingly, Mike Vranos’s Ellington cut the largest investment of the 450+ funds we watch, valued at an estimated $0.1 million in stock., and Jim Simons of Renaissance Technologies was right behind this move, as the fund cut about $0.1 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds last quarter.

Insider trading activity in Air Transport Services Group Inc. (NASDAQ:ATSG)

Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has seen transactions within the past 180 days. Over the last six-month time period, Air Transport Services Group Inc. (NASDAQ:ATSG) has seen 3 unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Air Transport Services Group Inc. (NASDAQ:ATSG). These stocks are UTi Worldwide Inc. (NASDAQ:UTIW), Hub Group Inc (NASDAQ:HUBG), Forward Air Corporation (NASDAQ:FWRD), Roadrunner Transportation Systems Inc (NYSE:RRTS), and XPO Logistics Inc (NYSE:XPO). This group of stocks belong to the air delivery & freight services industry and their market caps are similar to ATSG’s market cap.

With the results demonstrated by our studies, retail investors should always keep an eye on hedge fund and insider trading sentiment, and Air Transport Services Group Inc. (NASDAQ:ATSG) is an important part of this process.

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