With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Arc Group World Wide Inc (NASDAQ:ARCW).
Is Arc Group World Wide Inc (NASDAQ:ARCW) an excellent stock to buy now? Investors who are in the know are in a bearish mood. The number of bullish hedge fund bets was trimmed by 2 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as CAS Medical Systems Inc (NASDAQ:CASM), Goodrich Petroleum Corporation (NYSE:GDP), and Discovery Laboratories, Inc. (NASDAQ:DSCO) to gather more data points.
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In the eyes of most traders, hedge funds are assumed to be slow, outdated financial tools of yesteryear. While there are over 8000 funds in operation today, Our researchers look at the top tier of this group, about 700 funds. It is estimated that this group of investors command bulk of the smart money’s total asset base, and by shadowing their matchless stock picks, Insider Monkey has come up with several investment strategies that have historically surpassed Mr. Market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Keeping this in mind, we’re going to check out the key action surrounding Arc Group World Wide Inc (NASDAQ:ARCW).
How are hedge funds trading Arc Group World Wide Inc (NASDAQ:ARCW)?
Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Among the funds that held the largest stakes in ARCW at the end of September, Peter Keane‘s Keane Capital Management reported the top position, worth $0.1 million and representing 0.1% of its equity portfolio. Two other funds with stakes in the company are Chuck Royce’s Royce & Associates and Jim Simons’ Renaissance Technologies.
Due to the fact that Arc Group World Wide Inc (NASDAQ:ARCW) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedgies who were dropping their positions entirely in the third quarter. It’s worth mentioning that Joseph A. Jolson’s Harvest Capital Strategies said goodbye to the biggest investment of all the hedgies watched by Insider Monkey, valued at close to $3 million in stock. Mark Coe’s fund, Coe Capital Management, also cut its stock, about $0.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Arc Group World Wide Inc (NASDAQ:ARCW) but similarly valued. We will take a look at CAS Medical Systems Inc (NASDAQ:CASM), Goodrich Petroleum Corporation (NYSE:GDP), Discovery Laboratories, Inc. (NASDAQ:DSCO), and Alphatec Holdings Inc (NASDAQ:ATEC). This group of stocks’ market caps are closest to ARCW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CASM | 6 | 7762 | 0 |
| GDP | 9 | 2540 | -1 |
| DSCO | 9 | 13283 | 1 |
| ATEC | 4 | 3747 | -2 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $2 million in ARCW’s case. Goodrich Petroleum Corporation (NYSE:GDP) is the most popular stock in this table. On the other hand Alphatec Holdings Inc (NASDAQ:ATEC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Arc Group World Wide Inc (NASDAQ:ARCW) is even less popular than ATEC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.