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Did Hedge Funds Drop The Ball On Knight-Swift Transportation Holdings Inc. (KNX) ?

Reymerlyn Martin

At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.

Knight-Swift Transportation Holdings Inc. (NYSE:KNX) investors should be aware of a decrease in hedge fund sentiment of late. KNX was in 26 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 31 hedge funds in our database with KNX positions at the end of the previous quarter. Our calculations also showed that KNX isn't among the 30 most popular stocks among hedge funds.

In the financial world there are plenty of gauges investors employ to value stocks. Two of the best gauges are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the best money managers can outperform the market by a very impressive amount (see the details here).

Jonathan Barrett Luminus Management

Let's take a glance at the fresh hedge fund action surrounding Knight-Swift Transportation Holdings Inc. (NYSE:KNX).

Hedge fund activity in Knight-Swift Transportation Holdings Inc. (NYSE:KNX)

At the end of the fourth quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from the previous quarter. By comparison, 37 hedge funds held shares or bullish call options in KNX 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.

KNX_apr2019

The largest stake in Knight-Swift Transportation Holdings Inc. (NYSE:KNX) was held by Luminus Management, which reported holding $93.4 million worth of stock at the end of September. It was followed by Impala Asset Management with a $74.4 million position. Other investors bullish on the company included 12th Street Asset Management, Millennium Management, and Anchor Bolt Capital.

Because Knight-Swift Transportation Holdings Inc. (NYSE:KNX) has faced declining sentiment from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of hedge funds that elected to cut their positions entirely in the third quarter. It's worth mentioning that Mike Masters's Masters Capital Management cut the biggest stake of the "upper crust" of funds watched by Insider Monkey, worth close to $17.2 million in stock. Philip Hempleman's fund, Ardsley Partners, also said goodbye to its stock, about $17.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 5 funds in the third quarter.

Let's go over hedge fund activity in other stocks similar to Knight-Swift Transportation Holdings Inc. (NYSE:KNX). These stocks are Genesee & Wyoming Inc (NYSE:GWR), AGCO Corporation (NYSE:AGCO), Lazard Ltd (NYSE:LAZ), and Prosperity Bancshares, Inc. (NYSE:PB). This group of stocks' market caps are similar to KNX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GWR,18,322177,7 AGCO,32,238888,11 LAZ,16,481052,-1 PB,9,53292,3 Average,18.75,273852,5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $274 million. That figure was $299 million in KNX's case. AGCO Corporation (NYSE:AGCO) is the most popular stock in this table. On the other hand Prosperity Bancshares, Inc. (NYSE:PB) is the least popular one with only 9 bullish hedge fund positions. Knight-Swift Transportation Holdings Inc. (NYSE:KNX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on KNX as the stock returned 38.7% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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