ArQule, Inc. (ARQL): Hedge Funds and Insiders Are Bearish, What Should You Do?

Is ArQule, Inc. (NASDAQ:ARQL) a buy here? The best stock pickers are reducing their bets on the stock. The number of bullish hedge fund bets were cut by 2 recently.

In today’s marketplace, there are plenty of indicators market participants can use to watch the equity markets. A duo of the most useful are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best fund managers can beat the broader indices by a significant amount (see just how much).

Equally as beneficial, positive insider trading sentiment is another way to parse down the world of equities. Just as you’d expect, there are a variety of reasons for an upper level exec to get rid of shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various empirical studies have demonstrated the useful potential of this strategy if you know where to look (learn more here).

Keeping this in mind, let’s take a look at the latest action surrounding ArQule, Inc. (NASDAQ:ARQL).

What have hedge funds been doing with ArQule, Inc. (NASDAQ:ARQL)?

Heading into Q2, a total of 11 of the hedge funds we track were bullish in this stock, a change of -15% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially.

According to our comprehensive database, First Eagle Investment Management, managed by Jean-Marie Eveillard, holds the largest position in ArQule, Inc. (NASDAQ:ARQL). First Eagle Investment Management has a $11.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Andrew Spokes of Farallon Capital, with a $3.8 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include Julian Baker and Felix Baker’s Baker Bros. Advisors, D. E. Shaw’s D E Shaw and Thomas Bailard’s Bailard Inc.

Since ArQule, Inc. (NASDAQ:ARQL) has faced falling interest from the entirety of the hedge funds we track, logic holds that there were a few funds who sold off their entire stakes at the end of the first quarter. Intriguingly, James E. Flynn’s Deerfield Management sold off the largest stake of the 450+ funds we track, worth about $3 million in call options. Peter Kolchinsky’s fund, RA Capital Management, also said goodbye to its stock, about $2.6 million worth. These moves are interesting, as total hedge fund interest dropped by 2 funds at the end of the first quarter.

How are insiders trading ArQule, Inc. (NASDAQ:ARQL)?

Bullish insider trading is at its handiest when the company we’re looking at has experienced transactions within the past half-year. Over the latest half-year time frame, ArQule, Inc. (NASDAQ:ARQL) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to ArQule, Inc. (NASDAQ:ARQL). These stocks are ShangPharma Corp (ADR) (NYSE:SHP), OncoGenex Pharmaceuticals Inc (NASDAQ:OGXI), Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN), Durata Therapeutics Inc (NASDAQ:DRTX), and Cytokinetics, Inc. (NASDAQ:CYTK). This group of stocks belong to the biotechnology industry and their market caps are closest to ARQL’s market cap.