Where Do Hedge Funds Stand On Patriot Transportation Holding Inc (PATI)?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Patriot Transportation Holding Inc (NASDAQ:PATI).

Patriot Transportation Holding Inc (NASDAQ:PATI) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of March. Our calculations also showed that PATI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare PATI to other stocks including Nuverra Environmental Solutions Inc (NYSE:NES), Creatd, Inc. (NASDAQ:CRTD), and Wireless Telecom Group, Inc. (NYSE:WTT) to get a better sense of its popularity.

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. 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 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Chuck Royce of Royce & Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. With all of this in mind let’s take a look at the new hedge fund action regarding Patriot Transportation Holding Inc (NASDAQ:PATI).

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

At first quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in PATI over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Minerva Advisors was the largest shareholder of Patriot Transportation Holding Inc (NASDAQ:PATI), with a stake worth $3.2 million reported as of the end of March. Trailing Minerva Advisors was Royce & Associates, which amassed a stake valued at $0.6 million. Renaissance Technologies was 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 Minerva Advisors allocated the biggest weight to Patriot Transportation Holding Inc (NASDAQ:PATI), around 1.77% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.0041 percent of its 13F equity portfolio to PATI.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s also examine hedge fund activity in other stocks similar to Patriot Transportation Holding Inc (NASDAQ:PATI). We will take a look at Nuverra Environmental Solutions Inc (NYSE:NES), Creatd, Inc. (NASDAQ:CRTD), Wireless Telecom Group, Inc. (NYSE:WTT), BioHiTech Global, Inc. (NASDAQ:BHTG), Phio Pharmaceuticals Corp. (NASDAQ:PHIO), Eltek Ltd. (NASDAQ:ELTK), and Newater Technology, Inc. (NASDAQ:NEWA). All of these stocks’ market caps are closest to PATI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.1 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $4 million in PATI’s case. Nuverra Environmental Solutions Inc (NYSE:NES) is the most popular stock in this table. On the other hand Wireless Telecom Group, Inc. (NYSE:WTT) is the least popular one with only 1 bullish hedge fund positions. Patriot Transportation Holding Inc (NASDAQ:PATI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PATI is 68.3. 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. 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately PATI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PATI were disappointed as the stock returned 3.2% since the end of March (through 6/11) 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.

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

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