Top Transportation Sector Picks by Fund Gurus Concentrated in the Sector

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 |  Includes: CSX, DRYS, FRO, OSGB, UNP, USAK
by: GuruFundPicks
What do the top Hedge Fund and Mutual Fund Gurus like in the Transportation Sector? Through research of the latest available institutional 13-F filings, this article identifies the Gurus who are most invested in the Transportation Sector, and the specific stocks within that group that they prefer to hold in their portfolios. Please note that the group includes trucking, shipping, and rail industries, but does not include airline and air cargo industries as they were covered in another article.

This is the thirty-eighth article in a series, and will be among the last in this series, as the latest March 2011 quarter 13-F Institutional filings are now almost complete. Later this week, I intend to publish the ‘Top New and Added Picks’ of Guru Funds by industry / sector, detailing this time not the top holdings, but more importantly what ‘New’ positions they took and what existing positions they added to in the latest March 2011 quarter. Please check my article page for previous articles in this series.
A Guru is defined as someone who is regarded as having great knowledge, wisdom, and authority in a certain area. When it comes to hedge funds, there are a number of ways to anoint leading managers as Gurus, including long-term performance, low portfolio volatility and an elite reputation in the investment community.
Many of us are familiar with leading investors and hedge fund managers such as Warren Buffett, George Soros, Carl Icahn and Julian Robertson, but the hedge fund community alone includes over 9,000 funds; add in mutual funds, ETFs, and other investment entities and the number is likely to be at least two to three times that number. While there is no official list of Gurus, less than one percent-- or between 100 to 200 fund managers-- are commonly believed to have earned the distinction of being called Gurus by the larger investment community.
The study of the investing habits of Gurus can be informative as these are very savvy, well-respected investors with a high personal net worth deploying large sums of capital from their funds regularly. They have a long-term track record of success, and while one can easily just ride their coattails, the savvy investor may want to use these lists as a starting point to conduct their own due diligence.

The total capitalization of the U.S. Equity markets is somewhere in the $15 trillion range, and the total market capitalization of leading Transportation Sector companies (ex airlines) is $260 billion or just over 1.7% of the overall market. The table lists the top four investment Gurus whose funds have invested at least twice that or 3.4% in the group. The following are their leading picks in that group:
  • Union Pacific Corp. (NYSE:UNP), a provider of rail transportation with 31,953 miles of main and branch line track across 23 states in the western U.S.
  • CSX Corp. (NASDAQ:CSX), an operator of 21,000-mile rail system in 23 states, D.C. and two Canadian provinces.
  • Dryships Inc. (NASDAQ:DRYS), a Greek provider of carrier transportation services for drybulk commodities with a fleet of 39 vessels.
  • Frontline Ltd. ADR (NYSE:FRO), a provider of tanker transportation services of oil and oil products through a fleet of 76 vessels.
  • Overseas Shipholding Group (NYSEMKT:OSG), a provider of shipping transportation services for crude oil and petroleum bulk products with a fleet of 106 vessels.
  • USA Truck Inc. (NASDAQ:USAK) is a dry van truckload carrier of general commodity freight in Interstate and foreign commerce.

Table
Fund and Guru
Type of Fund
Assets Under Management
Percent Equity Portfolio invested in Transportation Companies (ex Airlines)
Major Transportation Sector (ex Airlines) company positions in Portfolio
Childrens Investment Fund Management UK LLP (Chris Hohn)
Hedge Fund - Shareholder Activist
$ 6.9 billion including $2.4 billion in US equity investments
7.9%
UNP
Shumway Capital Partners LLC (Chris Shumway)
Hedge Fund – Long/short Equity
$ 6.9 billion
5.8%
CSX, UNP
Woodbine Capital Advisors LP (Josh Berkowitz)
Hedge Fund - Global Macro
$ 440 million
4.1%
DRYS, FRO
Donald Smith & Co., Inc. (Donald G. Smith)
Hedge Fund and Mutual Funds - Deep Value
$ 3.2 billion
3.5%
OSG, USAK
Click to enlarge

The Children's Investment Fund Management (TCI) a hedge fund manager founded by Chris Hohn in 2003 is based out of London, and manages the Children's Investment Master Fund. The firm has a Value investment style and is a shareholder activist. This means that they take large stakes in target investments, and then use their influence resulting from the ownership to affect change at these companies, with the objective that these changes will result in more value for the shareholders.
Greenwich, Connecticut-based Shumway Capital Partners was founded by CEO Chris Shumway in 2002. Like many other Gurus profiled in this series, he is also a Tiger Cub, so called because he learned to pick stocks at Julian Robertson's legendary hedge fund Tiger Management LLC. The firm pursues a long / short equity strategy and uses fundamentals to drive their investment decision making.
Hedge fund Woodbine Capital Advisors was founded by Soros Fund Management alumni Josh Berkowitz and Marcel Kasumovich in 2009, and uses a global macro strategy to make its investments.
With total assets under management (AUM) of $3.2 billion, hedge fund Donald Smith & Co., Inc., headed by Guru Donald G. Smith, was founded 30 years ago. It invests in out-of-favor companies selling in the bottom decile of price-to-tangible book value ratios, and that have a significant earnings potential over the next 2-4 years.

Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my opinions and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to my thoughts and opinions. The contents of this article do not consider your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks, including loss of principal.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.