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Hedge Funds Are Dumping Knight-Swift Transportation Holdings Inc. (KNX)

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At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Knight-Swift Transportation Holdings Inc. (NYSE:KNX) makes for a good investment right now.

Knight-Swift Transportation Holdings Inc. (NYSE:KNX) was in 25 hedge funds' portfolios at the end of March. The all time high for this statistic is 52. KNX investors should pay attention to a decrease in hedge fund interest lately. There were 34 hedge funds in our database with KNX holdings at the end of December. Our calculations also showed that KNX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To the average investor there are a multitude of formulas investors put to use to size up publicly traded companies. A couple of the most useful formulas are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top hedge fund managers can beat the S&P 500 by a healthy amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

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BRIDGEWATER ASSOCIATES

Ray Dalio of Bridgewater Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let's take a glance at the key hedge fund action regarding Knight-Swift Transportation Holdings Inc. (NYSE:KNX).

Do Hedge Funds Think KNX Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -26% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KNX over the last 23 quarters. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Among these funds, AQR Capital Management held the most valuable stake in Knight-Swift Transportation Holdings Inc. (NYSE:KNX), which was worth $115.3 million at the end of the fourth quarter. On the second spot was D E Shaw which amassed $105.7 million worth of shares. Impala Asset Management, 12th Street Asset Management, and Water Street Capital 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 12th Street Asset Management allocated the biggest weight to Knight-Swift Transportation Holdings Inc. (NYSE:KNX), around 4.8% of its 13F portfolio. Game Creek Capital is also relatively very bullish on the stock, designating 2.97 percent of its 13F equity portfolio to KNX.

Because Knight-Swift Transportation Holdings Inc. (NYSE:KNX) has faced falling interest from the entirety of the hedge funds we track, logic holds that there exists a select few fund managers that slashed their positions entirely heading into Q2. At the top of the heap, John Overdeck and David Siegel's Two Sigma Advisors said goodbye to the largest position of all the hedgies monitored by Insider Monkey, comprising about $20 million in stock. Doug Gordon, Jon Hilsabeck and Don Jabro's fund, Shellback Capital, also cut its stock, about $15.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 9 funds heading into Q2.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Knight-Swift Transportation Holdings Inc. (NYSE:KNX) but similarly valued. We will take a look at DXC Technology Company (NYSE:DXC), Syneos Health, Inc. (NASDAQ:SYNH), Federal Realty Investment Trust (NYSE:FRT), Voya Financial Inc (NYSE:VOYA), Luminar Technologies, Inc. (NASDAQ:LAZR), ITT Inc. (NYSE:ITT), and Jabil Inc. (NYSE:JBL). This group of stocks' market values are similar to KNX's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DXC,28,1057642,-11 SYNH,28,460253,-1 FRT,16,43276,-1 VOYA,42,1031020,-2 LAZR,12,39243,-13 ITT,18,264004,-10 JBL,24,466622,-4 Average,24,480294,-6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $480 million. That figure was $341 million in KNX's case. Voya Financial Inc (NYSE:VOYA) is the most popular stock in this table. On the other hand Luminar Technologies, Inc. (NASDAQ:LAZR) is the least popular one with only 12 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 overall hedge fund sentiment score for KNX is 32.1. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately KNX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on KNX were disappointed as the stock returned 3.7% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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