At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Echo Global Logistics, Inc. (NASDAQ:ECHO) was in 13 hedge funds' portfolios at the end of the first quarter of 2019. ECHO has experienced a decrease in hedge fund sentiment lately. There were 15 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.
At the moment there are a lot of formulas stock traders have at their disposal to assess stocks. A duo of the most innovative formulas are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outclass the S&P 500 by a significant margin (see the details here).
We're going to view the new hedge fund action encompassing Echo Global Logistics, Inc. (NASDAQ:ECHO).
What have hedge funds been doing with Echo Global Logistics, Inc. (NASDAQ:ECHO)?
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ECHO over the last 15 quarters. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were upping their holdings substantially (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 $4.9 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $3.1 million worth of shares. Moreover, Citadel Investment Group, Gotham Asset Management, and PDT Partners were also bullish on Echo Global Logistics, Inc. (NASDAQ:ECHO), allocating a large percentage of their portfolios to this stock.
Because Echo Global Logistics, Inc. (NASDAQ:ECHO) has faced bearish sentiment from the entirety of the hedge funds we track, it's easy to see that there were a few hedgies that slashed their full holdings in the third quarter. It's worth mentioning that Minhua Zhang's Weld Capital Management dumped the largest position of the 700 funds monitored by Insider Monkey, comprising about $0.6 million in stock. David Costen Haley's fund, HBK Investments, also dropped its stock, about $0.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds in the third quarter.
Let's also examine hedge fund activity in other stocks similar to Echo Global Logistics, Inc. (NASDAQ:ECHO). These stocks are Preferred Bank (NASDAQ:PFBC), OraSure Technologies, Inc. (NASDAQ:OSUR), Oasis Midstream Partners LP (NYSE:OMP), and Cass Information Systems, Inc. (NASDAQ:CASS). This group of stocks' market valuations are similar to ECHO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PFBC,11,41067,0 OSUR,18,107535,-3 OMP,3,4325,0 CASS,11,15276,3 Average,10.75,42051,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $23 million in ECHO's case. OraSure Technologies, Inc. (NASDAQ:OSUR) is the most popular stock in this table. On the other hand Oasis Midstream Partners LP (NYSE:OMP) is the least popular one with only 3 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. 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately ECHO wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ECHO were disappointed as the stock returned -20.7% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.