Were Hedge Funds Right About Marten Transport, Ltd (MRTN)?

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Marten Transport, Ltd (NASDAQ:MRTN).

Is Marten Transport, Ltd (NASDAQ:MRTN) ready to rally soon? Prominent investors were buying. The number of long hedge fund positions improved by 2 in recent months. Marten Transport, Ltd (NASDAQ:MRTN) was in 18 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 23. Our calculations also showed that MRTN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 16 hedge funds in our database with MRTN positions at the end of the fourth quarter.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Donald Sussman of Paloma Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. Now we’re going to take a peek at the key hedge fund action regarding Marten Transport, Ltd (NASDAQ:MRTN).

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

Heading into the second quarter of 2021, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in MRTN a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

The largest stake in Marten Transport, Ltd (NASDAQ:MRTN) was held by Millennium Management, which reported holding $11 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $10.8 million position. Other investors bullish on the company included Empirical Capital Partners, 12th Street Asset Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Empirical Capital Partners allocated the biggest weight to Marten Transport, Ltd (NASDAQ:MRTN), around 6.99% of its 13F portfolio. 12th Street Asset Management is also relatively very bullish on the stock, dishing out 1.83 percent of its 13F equity portfolio to MRTN.

As one would reasonably expect, key money managers have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, created the biggest position in Marten Transport, Ltd (NASDAQ:MRTN). ExodusPoint Capital had $1.2 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $0.7 million position during the quarter. The other funds with new positions in the stock are Roger Ibbotson’s Zebra Capital Management, Donald Sussman’s Paloma Partners, and Bruce Kovner’s Caxton Associates LP.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Marten Transport, Ltd (NASDAQ:MRTN) but similarly valued. These stocks are James River Group Holdings Ltd (NASDAQ:JRVR), First Busey Corporation (NASDAQ:BUSE), Ferro Corporation (NYSE:FOE), Stewart Information Services Corp (NYSE:STC), Docebo Inc. (NASDAQ:DCBO), Axcelis Technologies Inc (NASDAQ:ACLS), and Broadmark Realty Capital Inc. (NYSE:BRMK). All of these stocks’ market caps resemble MRTN’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $64 million in MRTN’s case. Axcelis Technologies Inc (NASDAQ:ACLS) is the most popular stock in this table. On the other hand Docebo Inc. (NASDAQ:DCBO) is the least popular one with only 10 bullish hedge fund positions. Marten Transport, Ltd (NASDAQ:MRTN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MRTN is 66.8. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately MRTN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MRTN were disappointed as the stock returned -9.9% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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