Were Hedge Funds Right About Piling Into Old Dominion Freight Line (ODFL)?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Old Dominion Freight Line, Inc. (NASDAQ:ODFL) changed recently.

Is Old Dominion Freight Line, Inc. (NASDAQ:ODFL) undervalued? The smart money was getting more bullish. The number of long hedge fund positions rose by 3 lately. Old Dominion Freight Line, Inc. (NASDAQ:ODFL) was in 50 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 47. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ODFL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Clint Carlson of Carlson Capital

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

At the end of the fourth quarter, a total of 50 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the third quarter of 2020. On the other hand, there were a total of 34 hedge funds with a bullish position in ODFL a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, AQR Capital Management held the most valuable stake in Old Dominion Freight Line, Inc. (NASDAQ:ODFL), which was worth $162.5 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $99.8 million worth of shares. Citadel Investment Group, Echo Street Capital Management, and Balyasny Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Jade Capital Advisors allocated the biggest weight to Old Dominion Freight Line, Inc. (NASDAQ:ODFL), around 2.88% of its 13F portfolio. Cartenna Capital is also relatively very bullish on the stock, setting aside 2.19 percent of its 13F equity portfolio to ODFL.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Carlson Capital, managed by Clint Carlson, assembled the most outsized position in Old Dominion Freight Line, Inc. (NASDAQ:ODFL). Carlson Capital had $5 million invested in the company at the end of the quarter. Robert Vincent McHugh’s Jade Capital Advisors also initiated a $3.9 million position during the quarter. The other funds with brand new ODFL positions are Peter Avellone’s Cartenna Capital, Richard Schimel and Lawrence Sapanski’s Cinctive Capital Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s now take a look at hedge fund activity in other stocks similar to Old Dominion Freight Line, Inc. (NASDAQ:ODFL). We will take a look at Garmin Ltd. (NASDAQ:GRMN), Ryanair Holdings plc (NASDAQ:RYAAY), FleetCor Technologies, Inc. (NYSE:FLT), Coca-Cola European Partners plc (NYSE:CCEP), Viatris Inc. (NASDAQ:VTRS), MPLX LP (NYSE:MPLX), and Deutsche Bank Aktiengesellschaft (NYSE:DB). This group of stocks’ market caps are closest to ODFL’s market cap.

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As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $1268 million. That figure was $891 million in ODFL’s case. Viatris Inc. (NASDAQ:VTRS) is the most popular stock in this table. On the other hand MPLX LP (NYSE:MPLX) is the least popular one with only 13 bullish hedge fund positions. Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ODFL is 72.3. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on ODFL as the stock returned 32.2% since the end of Q4 (through 4/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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