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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards U.S. Xpress Enterprises, Inc. (NYSE:USX).
Is U.S. Xpress Enterprises, Inc. (NYSE:USX) undervalued? Hedge funds are in an optimistic mood. The number of long hedge fund bets moved up by 1 lately. Our calculations also showed that USX isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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David E. Shaw of D.E. Shaw[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to take a look at the fresh hedge fund action encompassing U.S. Xpress Enterprises, Inc. (NYSE:USX).
How have hedgies been trading U.S. Xpress Enterprises, Inc. (NYSE:USX)?
At Q1's end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards USX over the last 18 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in U.S. Xpress Enterprises, Inc. (NYSE:USX). Arrowstreet Capital has a $0.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Peter Algert and Kevin Coldiron of Algert Coldiron Investors, with a $0.2 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism contain D. E. Shaw's D E Shaw, Matthew Hulsizer's PEAK6 Capital Management and Greg Eisner's Engineers Gate Manager. In terms of the portfolio weights assigned to each position Algert Coldiron Investors allocated the biggest weight to U.S. Xpress Enterprises, Inc. (NYSE:USX), around 0.07% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to USX.
As one would reasonably expect, key hedge funds were leading the bulls' herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most outsized position in U.S. Xpress Enterprises, Inc. (NYSE:USX). Arrowstreet Capital had $0.4 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron's Algert Coldiron Investors also initiated a $0.2 million position during the quarter. The following funds were also among the new USX investors: Matthew Hulsizer's PEAK6 Capital Management and Greg Eisner's Engineers Gate Manager.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as U.S. Xpress Enterprises, Inc. (NYSE:USX) but similarly valued. These stocks are Gaia, Inc. (NASDAQ:GAIA), Nymox Pharmaceutical Corporation (NASDAQ:NYMX), Misonix, Inc. (NASDAQ:MSON), and Aspen Aerogels Inc (NYSE:ASPN). This group of stocks' market values match USX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GAIA,11,30002,2 NYMX,5,1340,0 MSON,9,18009,5 ASPN,10,17366,3 Average,8.75,16679,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $1 million in USX's case. Gaia, Inc. (NASDAQ:GAIA) is the most popular stock in this table. On the other hand Nymox Pharmaceutical Corporation (NASDAQ:NYMX) is the least popular one with only 5 bullish hedge fund positions. U.S. Xpress Enterprises, Inc. (NYSE:USX) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on USX as the stock returned 73.7% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.