The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards American Resources Corporation (NASDAQ:AREC).
Is AREC a good stock to buy? American Resources Corporation (NASDAQ:AREC) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic is 1. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. AREC has experienced an increase in activity from the world’s largest hedge funds recently. There were 1 hedge funds in our database with AREC holdings at the end of December. Our calculations also showed that AREC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Michael Gelband of ExodusPoint Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a look at the recent hedge fund action encompassing American Resources Corporation (NASDAQ:AREC).
Do Hedge Funds Think AREC Is A Good Stock To Buy Now?
At the end of March, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 200% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AREC over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Israel Englander’s Millennium Management has the largest position in American Resources Corporation (NASDAQ:AREC), worth close to $1.7 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by ExodusPoint Capital, led by Michael Gelband, holding a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position ExodusPoint Capital allocated the biggest weight to American Resources Corporation (NASDAQ:AREC), around 0.0028% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, setting aside 0.0012 percent of its 13F equity portfolio to AREC.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, established the biggest position in American Resources Corporation (NASDAQ:AREC). Millennium Management had $1.7 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $0.2 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as American Resources Corporation (NASDAQ:AREC) but similarly valued. We will take a look at The Bank of Princeton (NASDAQ:BPRN), Trecora Resources (NYSE:TREC), Second Sight Medical Products Inc (NASDAQ:EYES), Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE), Lazydays Holdings, Inc. (NASDAQ:LAZY), Exicure, Inc. (NASDAQ:XCUR), and L.B. Foster Company (NASDAQ:FSTR). All of these stocks’ market caps are closest to AREC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BPRN | 2 | 13793 | 0 |
| TREC | 6 | 24483 | 0 |
| EYES | 3 | 15582 | 2 |
| ZYNE | 6 | 3479 | 0 |
| LAZY | 10 | 33874 | 0 |
| XCUR | 9 | 19857 | 1 |
| FSTR | 15 | 36919 | 3 |
| Average | 7.3 | 21141 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $2 million in AREC’s case. L.B. Foster Company (NASDAQ:FSTR) is the most popular stock in this table. On the other hand The Bank of Princeton (NASDAQ:BPRN) is the least popular one with only 2 bullish hedge fund positions. American Resources Corporation (NASDAQ:AREC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AREC is 40.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately AREC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AREC investors were disappointed as the stock returned -25% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.