Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts usually don’t make them change their opinion towards a company. During the third quarter we observed increased volatility however, as small-cap stocks underperformed the market. Hedge fund investor letters indicated that they were cutting their overall exposure, closing out some positions and doubling down on others. Let’s take a look at the hedge fund sentiment towards Saia Inc (NASDAQ:SAIA) to find out whether it was one of their high conviction long-term ideas.
Is Saia Inc (NASDAQ:SAIA) a bargain? The best stock pickers are becoming more confident. The number of long hedge fund positions shot up by 9 recently. At the end of this article we will also compare SAIA to other stocks including Atento SA (NYSE:ATTO), HMS Holdings Corp. (NASDAQ:HMSY), and Calavo Growers, Inc. (NASDAQ:CVGW) to get a better sense of its popularity.
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In the eyes of most market participants, hedge funds are seen as underperforming, outdated financial vehicles of yesteryear. While there are more than 8,000 funds in operation today, our researchers hone in on the elite of this club, around 700 funds. These investment experts command the lion’s share of all hedge funds’ total asset base, and by tailing their top investments, Insider Monkey has figured out various investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Keeping this in mind, let’s go over the fresh action regarding Saia Inc (NASDAQ:SAIA).
Hedge fund activity in Saia Inc (NASDAQ:SAIA)
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, an 82% gain from the second quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or had already accumulated large positions).
According to Insider Monkey’s hedge fund database, Anchorage Advisors, managed by Kevin Michael Ulrich and Anthony Davis, holds the number one position in Saia Inc (NASDAQ:SAIA). Anchorage Advisors has a $67.8 million position in the stock, comprising 2.2% of its 13F portfolio. On Anchorage Advisors’ heels is Chuck Royce of Royce & Associates, with a $51.2 million position; 0.3% of his mutual fund’s 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions encompass John Brennan’s Sirios Capital Management, Israel Englander’s Millennium Management, and Ira Unschuld’s Brant Point Investment Management.
As industrywide interest jumped, specific money managers were breaking ground themselves. Millennium Management initiated the most outsized position in Saia Inc (NASDAQ:SAIA). Millennium Management had $7.4 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $1.2 million investment in the stock during the quarter. The following funds were also among the new SAIA investors: Renaissance Technologies, Neil Chriss’ Hutchin Hill Capital, and D E Shaw.
Let’s also examine hedge fund activity in other stocks similar to Saia Inc (NASDAQ:SAIA). These stocks are Atento SA (NYSE:ATTO), HMS Holdings Corp. (NASDAQ:HMSY), Calavo Growers, Inc. (NASDAQ:CVGW), and Lindsay Corporation (NYSE:LNN). This group of stocks’ market valuations match SAIA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATTO | 5 | 28862 | -2 |
| HMSY | 25 | 85073 | 14 |
| CVGW | 18 | 31164 | 2 |
| LNN | 11 | 97943 | -2 |
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $163 million in SAIA’s case. HMS Holdings Corp. (NASDAQ:HMSY) is the most popular stock in this table. On the other hand Atento SA (NYSE:ATTO) is the least popular one with only 5 bullish hedge fund positions. Saia Inc (NASDAQ:SAIA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal and prefer to spend our time researching stocks that hedge funds are piling on. In this regard both HMSY and SAIA look like good candidates to consider long positions in.
