Do Hedge Funds and Insiders Love American Railcar Industries, Inc. (ARII)?

What should smart American Railcar Industries, Inc. (NASDAQ:ARII) investors do?

Now, according to many investors, hedge funds are perceived as bloated, old investment vehicles of a period lost to current times. Although there are In excess of 8,000 hedge funds with their doors open in present day, Insider Monkey aim at the elite of this club, about 525 funds. Analysts calculate that this group controls most of all hedge funds’ total capital, and by watching their best picks, we’ve uncovered a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as necessary, optimistic insider trading activity is a second way to look at the marketplace. Obviously, there are a variety of incentives for an executive to cut shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this tactic if piggybackers understand what to do (learn more here).

What’s more, we’re going to discuss the latest info for American Railcar Industries, Inc. (NASDAQ:ARII).

How have hedgies been trading American Railcar Industries, Inc. (NASDAQ:ARII)?

In preparation for the third quarter, a total of 12 of the hedge funds we track were bullish in this stock, a change of -20% from the first quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings substantially.

Out of the hedge funds we follow, Carl Icahn’s Icahn Capital LP had the most valuable position in American Railcar Industries, Inc. (NASDAQ:ARII), worth close to $397.8 million, accounting for 1.8% of its total 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $10.7 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedgies that hold long positions include Matthew Hulsizer’s PEAK6 Capital Management, Israel Englander’s Millennium Management and Murray Stahl’s Horizon Asset Management.

As American Railcar Industries, Inc. (NASDAQ:ARII) has faced bearish sentiment from the smart money’s best and brightest, it’s safe to say that there was a specific group of money managers that decided to sell off their entire stakes last quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group cut the largest stake of the 450+ funds we monitor, valued at about $1.3 million in stock, and John Overdeck and David Siegel of Two Sigma Advisors was right behind this move, as the fund said goodbye to about $0.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 3 funds last quarter.

How are insiders trading American Railcar Industries, Inc. (NASDAQ:ARII)?

Bullish insider trading is particularly usable when the company in focus has seen transactions within the past six months. Over the latest six-month time period, American Railcar Industries, Inc. (NASDAQ:ARII) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to American Railcar Industries, Inc. (NASDAQ:ARII). These stocks are Westinghouse Air Brake Technologies Corp (NYSE:WAB), FreightCar America, Inc. (NASDAQ:RAIL), Trinity Industries, Inc. (NYSE:TRN), Guangshen Railway Co. Ltd (ADR) (NYSE:GSH), and Greenbrier Companies Inc (NYSE:GBX). This group of stocks are in the railroads industry and their market caps are similar to ARII’s market cap.

Using the returns explained by Insider Monkey’s analyses, regular investors must always watch hedge fund and insider trading sentiment, and American Railcar Industries, Inc. (NASDAQ:ARII) is no exception.

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