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Were Hedge Funds Right About Air Transport Services Group (ATSG)?

Reymerlyn Martin
·6 mins read

Hedge funds don't get the respect they used to get. Nowadays investors prefer passive funds over actively managed funds. One thing they don't realize is that 100% of the passive funds didn't see the coronavirus recession coming, but a lot of hedge funds did. Even we published an article near the end of February and predicted a US recession. Think about all the losses you could have avoided if you sold your shares in February and bought them back at the end of March.

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Air Transport Services Group Inc. (NASDAQ:ATSG) based on those filings.

Air Transport Services Group Inc. (NASDAQ:ATSG) has seen an increase in hedge fund sentiment recently. ATSG was in 20 hedge funds' portfolios at the end of the fourth quarter of 2019. There were 17 hedge funds in our database with ATSG positions at the end of the previous quarter. Our calculations also showed that ATSG isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

[caption id="attachment_746830" align="aligncenter" width="400"] Matthew Hulsizer of PEAK6 Capital[/caption]

Matthew Hulsizer PEAK6 Capital
Matthew Hulsizer PEAK6 Capital

We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with 77% accuracy, so we check out his stock picks. A former hedge fund manager is pitching the "next Amazon" in this video; again we are listening. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to go over the fresh hedge fund action encompassing Air Transport Services Group Inc. (NASDAQ:ATSG).

What have hedge funds been doing with Air Transport Services Group Inc. (NASDAQ:ATSG)?

At the end of the fourth quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in ATSG over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Moab Capital Partners was the largest shareholder of Air Transport Services Group Inc. (NASDAQ:ATSG), with a stake worth $45.2 million reported as of the end of September. Trailing Moab Capital Partners was Private Capital Management, which amassed a stake valued at $29.6 million. ACK Asset Management, Polar Capital, and Millennium Management 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 Moab Capital Partners allocated the biggest weight to Air Transport Services Group Inc. (NASDAQ:ATSG), around 17.85% of its 13F portfolio. ACK Asset Management is also relatively very bullish on the stock, designating 7.14 percent of its 13F equity portfolio to ATSG.

Consequently, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the biggest position in Air Transport Services Group Inc. (NASDAQ:ATSG). Millennium Management had $13.9 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also made a $2 million investment in the stock during the quarter. The other funds with new positions in the stock are Nick Thakore's Diametric Capital, Gavin Saitowitz and Cisco J. del Valle's Springbok Capital, and Robert Vincent McHugh's Jade Capital Advisors.

Let's go over hedge fund activity in other stocks similar to Air Transport Services Group Inc. (NASDAQ:ATSG). We will take a look at Cango Inc. (NYSE:CANG), Corcept Therapeutics Incorporated (NASDAQ:CORT), Kornit Digital Ltd. (NASDAQ:KRNT), and Viela Bio, Inc. (NASDAQ:VIE). This group of stocks' market values match ATSG's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CANG,1,379,0 CORT,21,156446,1 KRNT,12,44798,0 VIE,6,207492,6 Average,10,102279,1.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $177 million in ATSG's case. Corcept Therapeutics Incorporated (NASDAQ:CORT) is the most popular stock in this table. On the other hand Cango Inc. (NYSE:CANG) is the least popular one with only 1 bullish hedge fund positions. Air Transport Services Group Inc. (NASDAQ:ATSG) 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 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 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. Unfortunately ATSG wasn't nearly as popular as these 10 stocks and hedge funds that were betting on ATSG were disappointed as the stock returned -13.8% during the same time 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds
5 Most Popular Stocks Among Hedge Funds

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

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