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Should You Buy Marten Transport, Ltd (MRTN)?

Abigail Fisher

Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That's why we weren't surprised when hedge funds’ top 20 large-cap stock picks generated a return of 24.4% during the first 9 months of 2019 and outperformed the broader market benchmark by 4 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Marten Transport, Ltd (NASDAQ:MRTN) investors should pay attention to an increase in support from the world's most elite money managers of late. MRTN was in 18 hedge funds' portfolios at the end of June. There were 17 hedge funds in our database with MRTN positions at the end of the previous quarter. Our calculations also showed that MRTN isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

MRTN_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to check out the recent hedge fund action surrounding Marten Transport, Ltd (NASDAQ:MRTN).

What does smart money think about Marten Transport, Ltd (NASDAQ:MRTN)?

At the end of the second quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MRTN over the last 16 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

David Harding

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, MSDC Management, managed by Marc Lisker, Glenn Fuhrman and John Phelan, holds the number one position in Marten Transport, Ltd (NASDAQ:MRTN). MSDC Management has a $9.1 million position in the stock, comprising 1.1% of its 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $8.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers with similar optimism comprise Michael O'Keefe's 12th Street Asset Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and John Overdeck and David Siegel's Two Sigma Advisors.

With a general bullishness amongst the heavyweights, key money managers have jumped into Marten Transport, Ltd (NASDAQ:MRTN) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, established the most outsized position in Marten Transport, Ltd (NASDAQ:MRTN). Balyasny Asset Management had $0.6 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new MRTN position is David Harding's Winton Capital Management.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Marten Transport, Ltd (NASDAQ:MRTN) but similarly valued. We will take a look at ePlus Inc. (NASDAQ:PLUS), PJT Partners Inc (NYSE:PJT), MeiraGTx Holdings plc (NASDAQ:MGTX), and Vivint Solar Inc (NYSE:VSLR). All of these stocks' market caps match MRTN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PLUS,12,27761,3 PJT,15,142793,-4 MGTX,9,253019,-2 VSLR,11,36996,0 Average,11.75,115142,-0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $115 million. That figure was $44 million in MRTN's case. PJT Partners Inc (NYSE:PJT) is the most popular stock in this table. On the other hand MeiraGTx Holdings plc (NASDAQ:MGTX) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Marten Transport, Ltd (NASDAQ:MRTN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on MRTN as the stock returned 18.6% during Q3 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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