We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT).
J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) investors should be aware of an increase in hedge fund sentiment in recent months. Our calculations also showed that JBHT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_26575" align="aligncenter" width="600"] Louis Bacon Moore of Moore Capital[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to review the fresh hedge fund action surrounding J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT).
What have hedge funds been doing with J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT)?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards JBHT over the last 17 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) was held by Citadel Investment Group, which reported holding $63.3 million worth of stock at the end of September. It was followed by Park Presidio Capital with a $60.9 million position. Other investors bullish on the company included Balyasny Asset Management, Scopus Asset Management, and Carlson Capital. In terms of the portfolio weights assigned to each position Empirical Capital Partners allocated the biggest weight to J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), around 9.01% of its 13F portfolio. Park Presidio Capital is also relatively very bullish on the stock, dishing out 7.16 percent of its 13F equity portfolio to JBHT.
Now, key hedge funds have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the largest position in J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT). Balyasny Asset Management had $56.9 million invested in the company at the end of the quarter. Clint Carlson's Carlson Capital also initiated a $24.8 million position during the quarter. The following funds were also among the new JBHT investors: Gregg Moskowitz's Interval Partners, Cristan Blackman's Empirical Capital Partners, and Louis Bacon's Moore Global Investments.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) but similarly valued. These stocks are Advance Auto Parts, Inc. (NYSE:AAP), Okta, Inc. (NASDAQ:OKTA), Godaddy Inc (NYSE:GDDY), and iQIYI, Inc. (NASDAQ:IQ). This group of stocks' market valuations are closest to JBHT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AAP,36,1497113,-1 OKTA,49,1120794,10 GDDY,48,2545499,4 IQ,22,966821,0 Average,38.75,1532557,3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.75 hedge funds with bullish positions and the average amount invested in these stocks was $1533 million. That figure was $347 million in JBHT's case. Okta, Inc. (NASDAQ:OKTA) is the most popular stock in this table. On the other hand iQIYI, Inc. (NASDAQ:IQ) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is even less popular than IQ. Hedge funds dodged a bullet by taking a bearish stance towards JBHT. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately JBHT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); JBHT investors were disappointed as the stock returned 4.7% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.