How ArQule, Inc. (ARQL) Stacks Up Against Its Peers

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months. This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards ArQule, Inc. (NASDAQ:ARQL).

ArQule, Inc. (NASDAQ:ARQL) has seen an increase in activity from the world’s largest hedge funds of late. There were 7 hedge funds in our database with ARQL positions at the end of the previous quarter. 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 Strattec Security Corp. (NASDAQ:STRT), OFS Capital Corp (NASDAQ:OFS), and L.B. Foster Company (NASDAQ:FSTR) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Keeping this in mind, we’re going to go over the latest action regarding ArQule, Inc. (NASDAQ:ARQL).

Hedge fund activity in ArQule, Inc. (NASDAQ:ARQL)

At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in ARQL at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Nantahala Capital Management, led by Wilmot B. Harkey and Daniel Mack, holds the largest position in ArQule, Inc. (NASDAQ:ARQL). Nantahala Capital Management has a $16.3 million position in the stock, comprising 2% of its 13F portfolio. Coming in second is Biotechnology Value Fund / BVF Inc, led by Mark Lampert, which holds a $13.2 million position; 2.5% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions consist of Renaissance Technologies, one of the largest hedge funds in the world, D. E. Shaw’s D E Shaw and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors. We should note that Nantahala Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Now, specific money managers were breaking ground themselves. Citadel Investment Group, led by Ken Griffin, assembled the most outsized position in ArQule, Inc. (NASDAQ:ARQL). Citadel Investment Group had $0 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0 million investment in the stock during the quarter.

Let’s now review hedge fund activity in other stocks similar to ArQule, Inc. (NASDAQ:ARQL). These stocks are Strattec Security Corp. (NASDAQ:STRT), OFS Capital Corp (NASDAQ:OFS), L.B. Foster Company (NASDAQ:FSTR), and The Eastern Company (NASDAQ:EML). All of these stocks’ market caps match ARQL’s market cap.

As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $35 million in ARQL’s case. L.B. Foster Company (NASDAQ:FSTR) is the most popular stock in this table. On the other hand Strattec Security Corp. (NASDAQ:STRT) is the least popular one with only 4 bullish hedge fund positions. ArQule, Inc. (NASDAQ:ARQL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FSTR might be a better candidate to consider taking a long position in.