Hedge Funds Are Crazy About America’s Car-Mart, Inc. (CRMT)

Is America’s Car-Mart, Inc. (NASDAQ:CRMT) going to take off soon? Investors who are in the know are taking a bullish view. The number of long hedge fund bets increased by 1 recently.

To the average investor, there are many gauges shareholders can use to monitor Mr. Market. A couple of the most useful are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top hedge fund managers can outpace the S&P 500 by a superb margin (see just how much).

Equally as important, positive insider trading sentiment is another way to parse down the financial markets. Obviously, there are a variety of reasons for an upper level exec to drop shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the valuable potential of this tactic if investors understand what to do (learn more here).

Consequently, we’re going to take a look at the latest action regarding America’s Car-Mart, Inc. (NASDAQ:CRMT).

How are hedge funds trading America’s Car-Mart, Inc. (NASDAQ:CRMT)?

In preparation for this quarter, a total of 6 of the hedge funds we track were long in this stock, a change of 20% from the first quarter. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the most valuable position in America’s Car-Mart, Inc. (NASDAQ:CRMT), worth close to $29.9 million, comprising 0.1% of its total 13F portfolio. Coming in second is Hirzel Capital Management, managed by Zac Hirzel, which held a $9.5 million position; 3.3% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Richard C. Patton’s Courage Capital, David Dreman’s Dreman Value Management and Cliff Asness’s AQR Capital Management.

Now, key money managers have jumped into America’s Car-Mart, Inc. (NASDAQ:CRMT) headfirst. Dreman Value Management, managed by David Dreman, initiated the largest position in America’s Car-Mart, Inc. (NASDAQ:CRMT). Dreman Value Management had 2.9 million invested in the company at the end of the quarter.

How are insiders trading America’s Car-Mart, Inc. (NASDAQ:CRMT)?

Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has experienced transactions within the past six months. Over the last half-year time frame, America’s Car-Mart, Inc. (NASDAQ:CRMT) has seen 1 unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to America’s Car-Mart, Inc. (NASDAQ:CRMT). These stocks are Sonic Automotive Inc (NYSE:SAH), Group 1 Automotive, Inc. (NYSE:GPI), Lithia Motors Inc (NYSE:LAD), Asbury Automotive Group, Inc. (NYSE:ABG), and Rush Enterprises, Inc. (NASDAQ:RUSHB). This group of stocks belong to the auto dealerships industry and their market caps are similar to CRMT’s market cap.