Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by nearly 9 percentage points since the end of the third quarter of 2018 as investors worried over the possible ramifications of rising interest rates and escalation of the trade war with China. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Heartland Express, Inc. (NASDAQ:HTLD) and see how the stock is affected by the recent hedge fund activity.
Heartland Express, Inc. (NASDAQ:HTLD) investors should be aware of an increase in hedge fund interest recently. HTLD was in 14 hedge funds' portfolios at the end of March. There were 7 hedge funds in our database with HTLD positions at the end of the previous quarter. Our calculations also showed that HTLD isn't among the 30 most popular stocks among hedge funds.
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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to go over the latest hedge fund action encompassing Heartland Express, Inc. (NASDAQ:HTLD).
How have hedgies been trading Heartland Express, Inc. (NASDAQ:HTLD)?
At Q1's end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from the fourth quarter of 2018. On the other hand, there were a total of 12 hedge funds with a bullish position in HTLD a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Maverick Capital held the most valuable stake in Heartland Express, Inc. (NASDAQ:HTLD), which was worth $6.7 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $5.7 million worth of shares. Moreover, Luminus Management, D E Shaw, and Two Sigma Advisors were also bullish on Heartland Express, Inc. (NASDAQ:HTLD), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls' herd. Maverick Capital, managed by Lee Ainslie, created the most valuable position in Heartland Express, Inc. (NASDAQ:HTLD). Maverick Capital had $6.7 million invested in the company at the end of the quarter. Jonathan Barrett and Paul Segal's Luminus Management also made a $3.4 million investment in the stock during the quarter. The following funds were also among the new HTLD investors: Dmitry Balyasny's Balyasny Asset Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Benjamin A. Smith's Laurion Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Heartland Express, Inc. (NASDAQ:HTLD) but similarly valued. These stocks are Saia Inc (NASDAQ:SAIA), Glu Mobile Inc. (NASDAQ:GLUU), Magellan Health Inc (NASDAQ:MGLN), and Pretium Resources Inc (NYSE:PVG). This group of stocks' market valuations match HTLD's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SAIA,14,38736,-4 GLUU,25,130789,5 MGLN,21,383642,6 PVG,21,84984,-1 Average,20.25,159538,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $28 million in HTLD's case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand Saia Inc (NASDAQ:SAIA) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Heartland Express, Inc. (NASDAQ:HTLD) is even less popular than SAIA. Hedge funds dodged a bullet by taking a bearish stance towards HTLD. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately HTLD wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); HTLD investors were disappointed as the stock returned -6% during the same time frame 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 the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.