Fund managers are stampeding into shares of U.S. long-haul trucking company Swift Transportation Co as oil prices touch five-year lows, but some analysts say a shortage of drivers may slam the brakes on the rally. Portfolio managers from Goldman Sachs, Fidelity, and Federated Investors were among the 65 funds that added Swift shares to their portfolios over the last three months, an 80 percent jump in institutional purchases from the quarter before, according to Morningstar. Portfolio managers have been attracted to the company, which is one of the largest in its industry and has a market value of $3.8 billion. They expect falling fuel costs and a jump in shipping volumes as a result of increased consumer spending to send Swift's above-average margins higher. Yet Swift might not benefit from low oil prices as much as some investors expect, analysts say. About 90 percent of its fuel costs are borne by its customers in the form of surcharges that are reset weekly to the current price of gas, said analyst Todd Fowler of KeyBanc Capital Markets in Cleveland. As a result, a drop in gas prices only benefits Swift in the relatively short intervals when trucks are not carrying goods. Wages for drivers are a far bigger cost for the company, he said, accounting for about 30 percent of spending. Before the oil price drop attracted new investors, Swift shares traded largely on driver pay. They fell 17 percent on July 15 after the company announced the largest salary increase in its history to try to attract new drivers to offset the number of retiring baby boomers. "Most millennials or Gen Xers have no interest in being a truck driver, no matter what you pay them" because of the stress of meeting deadlines and being tracked by software that records every moment behind the wheel, said Stifel Nicolaus & Co Inc analyst John Larkin. "This is not the cowboy trucker's world anymore." The challenge of recruiting drivers affects competitors such as Con-way Inc and JB Hunt Transport Services Inc as well, yet they typically had higher pay rates that Swift is now trying to catch up to, Larkin added. For 2014, shares of Swift are up 24.3 percent, while Con-way has risen 22.6 percent and JB Hunt is up 4 percent. Swift stock is trading at 27.8 times trailing earnings, or nearly 75 percent more than the Standard & Poor's 500 index. With its valuation already rich, investors are looking at the possibility that Swift will have to raise driver pay annually for at least the next three years, said BB&T Capital Markets analyst Thom Albrecht. Albrecht sees Swift's fiscal 2015 net income forecast of $1.62 to $1.72 per share as "doable," but that will hinge mostly whether the company achieves its goal of attracting 200 drivers this quarter to meet demand. "Drivers will be the primary determinant to any potential upside in earnings to Swift," Albrecht said. Betting on Customers Investors say they expect the company to pass on its additional costs of drivers to its customers, which tend to be large retailers such as Wal-Mart Stores Inc and Best Buy Co Inc. "If you are a customer, it's a lot easier to pay more when you see your sales are increasing due to low fuel prices," said Eric Marshall, who helps manage the Hodges Small Cap fund. He said he recently bought Swift and other trucking companies for the first time in more than a decade. New federal regulations, expected to take effect by September, will require truckers to use electronic log monitoring devices and will probably lead to consolidation in the fragmented industry, Marshall said. Swift is likely to expand its reach and number of drivers through acquisitions, he said. But Larkin, the Stifel Nicolaus analyst, said driver costs would continue to weigh on Swift for the foreseeable future. "The long-term outlook for Swift is spectacular," he said, "but near-term, you have to take driver's pay up in order to keep the trucks full." (Reuters)