The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 28 holdings, data that is available nowhere else. Should you consider Echo Global Logistics, Inc. (NASDAQ:ECHO) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Echo Global Logistics, Inc. (NASDAQ:ECHO) investors should pay attention to a decrease in hedge fund interest lately. ECHO was in 12 hedge funds' portfolios at the end of June. There were 13 hedge funds in our database with ECHO holdings at the end of the previous quarter. Our calculations also showed that ECHO 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.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 take a look at the key hedge fund action regarding Echo Global Logistics, Inc. (NASDAQ:ECHO).
Hedge fund activity in Echo Global Logistics, Inc. (NASDAQ:ECHO)
At Q2's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in ECHO over the last 16 quarters. With the smart money's capital changing hands, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds, Millennium Management held the most valuable stake in Echo Global Logistics, Inc. (NASDAQ:ECHO), which was worth $5.2 million at the end of the second quarter. On the second spot was D E Shaw which amassed $3.1 million worth of shares. Moreover, Gotham Asset Management, Citadel Investment Group, and Renaissance Technologies were also bullish on Echo Global Logistics, Inc. (NASDAQ:ECHO), allocating a large percentage of their portfolios to this stock.
Seeing as Echo Global Logistics, Inc. (NASDAQ:ECHO) has faced declining sentiment from hedge fund managers, it's easy to see that there exists a select few money managers that elected to cut their entire stakes last quarter. It's worth mentioning that Sara Nainzadeh's Centenus Global Management dropped the largest stake of all the hedgies tracked by Insider Monkey, worth about $1.5 million in stock, and Peter Algert and Kevin Coldiron's Algert Coldiron Investors was right behind this move, as the fund sold off about $0.9 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds last quarter.
Let's go over hedge fund activity in other stocks similar to Echo Global Logistics, Inc. (NASDAQ:ECHO). We will take a look at Fossil Group Inc (NASDAQ:FOSL), Magenta Therapeutics, Inc. (NASDAQ:MGTA), Akebia Therapeutics Inc (NASDAQ:AKBA), and Revance Therapeutics Inc (NASDAQ:RVNC). This group of stocks' market valuations are closest to ECHO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FOSL,13,66559,-4 MGTA,8,72421,0 AKBA,14,194634,-5 RVNC,10,27622,-2 Average,11.25,90309,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $19 million in ECHO's case. Akebia Therapeutics Inc (NASDAQ:AKBA) is the most popular stock in this table. On the other hand Magenta Therapeutics, Inc. (NASDAQ:MGTA) is the least popular one with only 8 bullish hedge fund positions. Echo Global Logistics, Inc. (NASDAQ:ECHO) is not the most popular stock in this group but hedge fund interest is still above average. 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 ECHO as the stock returned 8.5% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.