Analyzing 1Q15 Trade Activity among Popular Institutional Filers
Why Hedge Funds Were Heedful of Courier Service Providers in 1Q15
Air freight and logistics stocks that were popular among key filers
In the previous part of this series, we discussed the rationale and expectations of some of the key institutional filers holding air freight stocks. Now let’s take a look at some stocks from the air freight industry that institutional filers added, reduced, or cut from their portfolios. For our analysis, we have considered trade activity among 150 popular filers. The trend we described in the first part of our series encompasses all 13F filers, while our discussion here is limited to some of the more significant ones.
As illustrated in the table below, United Parcel Services (UPS), C.H. Robinson Worldwide (CHRW), and FedEx (FDX) were among the most preferred stocks in the industry.
Stocks that got the cold shoulder
UTi Worldwide (UTIW), XPO Logistics (XPO), Hub Group (HUBG), and Expeditors International of Washington D.C. (EXPD) were among logistics stocks that were lowered by the most filers.
Piecing the trades together
While it would be unfair to arrive at any sort of conclusion from the trade activities mentioned above, we’ll highlight some key takeaways.
UPS and FDX are the industry leaders both in terms of revenue and market capitalization. Over the last five-year period, they have delivered annualized total returns of 13.29% and 18.42%, respectively. During the same timeframe, CHRW has generated annualized total returns of 4.16% and XPO has generated a whopping 54.51% return to its shareholders on an annualized basis.
XPO’s attractive shareholder returns were largely driven by its aggressive acquisition strategy. However, unlike their peers, UPS, FDX, and CHRW have demonstrated greater pricing power, and have a better track record for generating stable profit margins. So it is easy to see why UPS and FDX have been long-term favorites of institutional investors.
Investors who want exposure to the industry through an ETF can look into the iShares Transportation Average ETF (IYT) and the S&P Transportation ETF (XTN). While these ETFs include many stocks from the broader transportation sector, the risk return characteristics are predominantly aligned with that of the air freight and logistics industry.
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