At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. 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 Ryder System, Inc. (NYSE:R) at the end of the second quarter and determine whether the smart money was really smart about this stock.
Ryder System, Inc. (NYSE:R) has experienced an increase in activity from the world's largest hedge funds in recent months. Ryder System, Inc. (NYSE:R) was in 20 hedge funds' portfolios at the end of June. The all time high for this statistics is 29. Our calculations also showed that R isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are tons of metrics shareholders put to use to appraise publicly traded companies. Two of the most underrated metrics are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce the market by a very impressive amount (see the details here).
Jonathan Barrett of Luminus Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let's take a peek at the latest hedge fund action surrounding Ryder System, Inc. (NYSE:R).
How are hedge funds trading Ryder System, Inc. (NYSE:R)?
At Q2's end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in R over the last 20 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Pzena Investment Management held the most valuable stake in Ryder System, Inc. (NYSE:R), which was worth $128.6 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $38.9 million worth of shares. Luminus Management, Two Sigma Advisors, and Citadel Investment Group were 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 Luminus Management allocated the biggest weight to Ryder System, Inc. (NYSE:R), around 0.96% of its 13F portfolio. Pzena Investment Management is also relatively very bullish on the stock, earmarking 0.84 percent of its 13F equity portfolio to R.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Ryder System, Inc. (NYSE:R) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, established the largest position in Ryder System, Inc. (NYSE:R). Balyasny Asset Management had $3.2 million invested in the company at the end of the quarter. Lee Ainslie's Maverick Capital also made a $0.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, Renee Yao's Neo Ivy Capital, and David Andre and Astro Teller's Cerebellum Capital.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Ryder System, Inc. (NYSE:R) but similarly valued. These stocks are Twist Bioscience Corporation (NASDAQ:TWST), Covetrus, Inc. (NASDAQ:CVET), ChampionX Corporation (NYSE:CHX), First Interstate Bancsystem Inc (NASDAQ:FIBK), Uniqure NV (NASDAQ:QURE), Barnes Group Inc. (NYSE:B), and Extended Stay America Inc (NASDAQ:STAY). This group of stocks' market caps are similar to R's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TWST,19,318287,3 CVET,24,210441,2 CHX,30,452274,11 FIBK,12,20747,5 QURE,49,595039,5 B,19,39170,8 STAY,30,353720,12 Average,26.1,284240,6.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.1 hedge funds with bullish positions and the average amount invested in these stocks was $284 million. That figure was $203 million in R's case. Uniqure NV (NASDAQ:QURE) is the most popular stock in this table. On the other hand First Interstate Bancsystem Inc (NASDAQ:FIBK) is the least popular one with only 12 bullish hedge fund positions. Ryder System, Inc. (NYSE:R) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for R is 27.7. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on R as the stock returned 14.2% in the third quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.