Is Schneider National, Inc. (NYSE:SNDR) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Schneider National, Inc. (NYSE:SNDR) a bargain? Money managers are in a pessimistic mood. The number of bullish hedge fund positions were trimmed by 1 lately. Our calculations also showed that sndr isn't among the 30 most popular stocks among hedge funds. SNDR was in 19 hedge funds' portfolios at the end of March. There were 20 hedge funds in our database with SNDR holdings at the end of the previous quarter.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to view the fresh hedge fund action regarding Schneider National, Inc. (NYSE:SNDR).
What does the smart money think about Schneider National, Inc. (NYSE:SNDR)?
At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SNDR over the last 15 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
No of Hedge Funds with SNDR Positions
Among these funds, AQR Capital Management held the most valuable stake in Schneider National, Inc. (NYSE:SNDR), which was worth $23.8 million at the end of the first quarter. On the second spot was Millennium Management which amassed $20.5 million worth of shares. Moreover, Two Sigma Advisors, Renaissance Technologies, and Citadel Investment Group were also bullish on Schneider National, Inc. (NYSE:SNDR), allocating a large percentage of their portfolios to this stock.
Because Schneider National, Inc. (NYSE:SNDR) has witnessed falling interest from the smart money, it's easy to see that there is a sect of hedgies who were dropping their positions entirely last quarter. At the top of the heap, Sander Gerber's Hudson Bay Capital Management sold off the biggest investment of all the hedgies watched by Insider Monkey, comprising about $2 million in stock. David Steinberg and Eric Udoff's fund, Marlowe Partners, also sold off its stock, about $1.3 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Schneider National, Inc. (NYSE:SNDR). We will take a look at GrafTech International Ltd. (NYSE:EAF), United Bankshares, Inc. (NASDAQ:UBSI), Ritchie Bros. Auctioneers Incorporated (NYSE:RBA), and Two Harbors Investment Corp (NYSE:TWO). This group of stocks' market caps resemble SNDR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EAF,24,142699,1 UBSI,8,28300,-2 RBA,15,151367,3 TWO,18,101532,2 Average,16.25,105975,1 [/table]
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $122 million in SNDR's case. GrafTech International Ltd. (NYSE:EAF) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 8 bullish hedge fund positions. Schneider National, Inc. (NYSE:SNDR) 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately SNDR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on SNDR were disappointed as the stock returned -18.4% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
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