Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
ArcBest Corp (NASDAQ:ARCB) was in 14 hedge funds’ portfolios at the end of the third quarter of 2018. ARCB has seen a decrease in enthusiasm from smart money lately. There were 16 hedge funds in our database with ARCB positions at the end of the previous quarter. Our calculations also showed that ARCB isn’t among the 30 most popular stocks among hedge funds.
To most shareholders, hedge funds are seen as slow, outdated financial tools of years past. While there are over 8,000 funds with their doors open today, Our experts look at the leaders of this group, approximately 700 funds. These hedge fund managers oversee the lion’s share of the smart money’s total asset base, and by shadowing their matchless picks, Insider Monkey has determined various investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship hedge fund strategy outpaced the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
Let’s take a look at the latest hedge fund action surrounding ArcBest Corp (NASDAQ:ARCB).
How have hedgies been trading ArcBest Corp (NASDAQ:ARCB)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the second quarter of 2018. On the other hand, there were a total of 13 hedge funds with a bullish position in ARCB at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, GLG Partners was the largest shareholder of ArcBest Corp (NASDAQ:ARCB), with a stake worth $24.3 million reported as of the end of September. Trailing GLG Partners was D E Shaw, which amassed a stake valued at $22.5 million. AQR Capital Management, Two Sigma Advisors, and Gotham Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that ArcBest Corp (NASDAQ:ARCB) has faced bearish sentiment from the smart money, we can see that there lies a certain “tier” of hedge funds that elected to cut their entire stakes in the third quarter. It’s worth mentioning that Peter Muller’s PDT Partners dumped the biggest position of the “upper crust” of funds followed by Insider Monkey, valued at close to $2.7 million in stock, and Jim Simons’s Renaissance Technologies was right behind this move, as the fund cut about $2.5 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 2 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ArcBest Corp (NASDAQ:ARCB) but similarly valued. These stocks are Endocyte, Inc. (NASDAQ:ECYT), NeoGenomics, Inc. (NASDAQ:NEO), PGT Innovations Inc. (NYSE:PGTI), and Presidio, Inc. (NASDAQ:PSDO). All of these stocks’ market caps match ARCB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ECYT | 27 | 540428 | 9 |
| NEO | 17 | 26803 | 4 |
| PGTI | 22 | 146257 | 2 |
| PSDO | 14 | 19163 | 8 |
| Average | 20 | 183163 | 5.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $183 million. That figure was $78 million in ARCB’s case. Endocyte, Inc. (NASDAQ:ECYT) is the most popular stock in this table. On the other hand Presidio, Inc. (NASDAQ:PSDO) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks ArcBest Corp (NASDAQ:ARCB) is even less popular than PSDO. 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.
Disclosure: None. This article was originally published at Insider Monkey.
