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Is MRTN A Good Stock To Buy Now?

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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. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Marten Transport, Ltd (NASDAQ:MRTN).

Is MRTN a good stock to buy now? Hedge fund interest in Marten Transport, Ltd (NASDAQ:MRTN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that MRTN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare MRTN to other stocks including Patrick Industries, Inc. (NASDAQ:PATK), Purple Innovation, Inc. (NASDAQ:PRPL), and Heron Therapeutics Inc (NASDAQ:HRTX) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David Harding
David Harding

David Harding of Winton Capital 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 recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Now we're going to take a look at the fresh hedge fund action regarding Marten Transport, Ltd (NASDAQ:MRTN).

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

At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MRTN over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital has the largest position in Marten Transport, Ltd (NASDAQ:MRTN), worth close to $10.3 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Cristan Blackman of Empirical Capital Partners, with a $9.6 million position; 9.3% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions consist of Michael O'Keefe's 12th Street Asset Management, Israel Englander's Millennium Management and David Harding's Winton Capital Management. In terms of the portfolio weights assigned to each position Empirical Capital Partners allocated the biggest weight to Marten Transport, Ltd (NASDAQ:MRTN), around 9.28% of its 13F portfolio. 12th Street Asset Management is also relatively very bullish on the stock, earmarking 2.08 percent of its 13F equity portfolio to MRTN.

Seeing as Marten Transport, Ltd (NASDAQ:MRTN) has faced a decline in interest from the aggregate hedge fund industry, it's easy to see that there exists a select few fund managers that elected to cut their positions entirely heading into Q4. Interestingly, Richard Driehaus's Driehaus Capital said goodbye to the largest investment of the "upper crust" of funds watched by Insider Monkey, valued at an estimated $7.6 million in stock. Ken Griffin's fund, Citadel Investment Group, also dropped its stock, about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Marten Transport, Ltd (NASDAQ:MRTN) but similarly valued. These stocks are Patrick Industries, Inc. (NASDAQ:PATK), Purple Innovation, Inc. (NASDAQ:PRPL), Heron Therapeutics Inc (NASDAQ:HRTX), World Fuel Services Corporation (NYSE:INT), Compugen Ltd. (NASDAQ:CGEN), Terex Corporation (NYSE:TEX), and Dicerna Pharmaceuticals Inc (NASDAQ:DRNA). This group of stocks' market valuations are closest to MRTN's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PATK,17,94066,2 PRPL,36,724349,8 HRTX,17,274649,-4 INT,16,79951,-2 CGEN,14,76267,5 TEX,18,212256,-1 DRNA,31,183699,-4 Average,21.3,235034,0.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $235 million. That figure was $58 million in MRTN's case. Purple Innovation, Inc. (NASDAQ:PRPL) is the most popular stock in this table. On the other hand Compugen Ltd. (NASDAQ:CGEN) is the least popular one with only 14 bullish hedge fund positions. Marten Transport, Ltd (NASDAQ:MRTN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MRTN is 41.1. 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 negative signal and 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately MRTN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MRTN investors were disappointed as the stock returned 7.2% since the end of September (through 12/14) 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 most of these stocks already outperformed the market in 2020.

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

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