Is Hub Group Inc (NASDAQ:HUBG) a sound stock to buy now? Hedge funds are in a bullish mood. The number of long hedge fund positions rose by 5 in recent months.
To most investors, hedge funds are assumed to be slow, outdated financial vehicles of years past. While there are over 8000 funds trading today, we look at the masters of this group, close to 450 funds. Most estimates calculate that this group has its hands on the majority of the smart money’s total capital, and by paying attention to their best stock picks, we have formulated a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year 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 25 percentage points in 6.5 month (explore the details and some picks here).
Just as integral, bullish insider trading activity is a second way to break down the marketplace. Obviously, there are plenty of reasons for an insider to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this method if “monkeys” know where to look (learn more here).
Consequently, let’s take a look at the key action encompassing Hub Group Inc (NASDAQ:HUBG).
What does the smart money think about Hub Group Inc (NASDAQ:HUBG)?
At the end of the fourth quarter, a total of 13 of the hedge funds we track were long in this stock, a change of 63% from the previous quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes significantly.
When looking at the hedgies we track, Diamond Hill Capital, managed by Ric Dillon, holds the largest position in Hub Group Inc (NASDAQ:HUBG). Diamond Hill Capital has a $20 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $13 million position; 0.1% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, Dmitry Balyasny’s Balyasny Asset Management and Richard Chilton’s Chilton Investment Company.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, established the most outsized position in Hub Group Inc (NASDAQ:HUBG). Balyasny Asset Management had 3 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also initiated a $2 million position during the quarter. The other funds with new positions in the stock are Joel Greenblatt’s Gotham Asset Management, Steven Cohen’s SAC Capital Advisors, and D. E. Shaw’s D E Shaw.
Insider trading activity in Hub Group Inc (NASDAQ:HUBG)
Bullish insider trading is most useful when the primary stock in question has seen transactions within the past half-year. Over the last six-month time frame, Hub Group Inc (NASDAQ:HUBG) has experienced zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Hub Group Inc (NASDAQ:HUBG). These stocks are XPO Logistics Inc (NYSE:XPO), Air Transport Services Group Inc. (NASDAQ:ATSG), Roadrunner Transportation Systems Inc (NYSE:RRTS), Forward Air Corporation (NASDAQ:FWRD), and UTi Worldwide Inc. (NASDAQ:UTIW). This group of stocks are the members of the air delivery & freight services industry and their market caps resemble HUBG’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| XPO Logistics Inc (NYSE:XPO) | 9 | 0 | 0 |
| Air Transport Services Group Inc. (NASDAQ:ATSG) | 10 | 3 | 1 |
| Roadrunner Transportation Systems Inc (NYSE:RRTS) | 9 | 1 | 2 |
| Forward Air Corporation (NASDAQ:FWRD) | 7 | 0 | 7 |
| UTi Worldwide Inc. (NASDAQ:UTIW) | 12 | 0 | 2 |
With the returns shown by our research, retail investors must always keep an eye on hedge fund and insider trading activity, and Hub Group Inc (NASDAQ:HUBG) applies perfectly to this mantra.
