Is America’s Car-Mart, Inc. (CRMT) Worthy of Your Portfolio?

The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards America’s Car-Mart, Inc. (NASDAQ:CRMT).

America’s Car-Mart, Inc. (NASDAQ:CRMT) has seen an increase in activity from the world’s largest hedge funds of late. CRMT was in 7 hedge funds’ portfolios at the end of September. There were 6 hedge funds in our database with CRMT 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 NVE Corporation (NASDAQ:NVEC), Foamix Pharmaceuticals Ltd (NASDAQ:FOMX), and PHI Inc. (NASDAQ:PHIIK) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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How have hedgies been trading America’s Car-Mart, Inc. (NASDAQ:CRMT)?

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 17% from the second quarter of 2016. On the other hand, there were a total of 6 hedge funds with a bullish position in CRMT at the beginning of this year. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Bares Capital Management, led by Brian Bares, holds the largest position in America’s Car-Mart, Inc. (NASDAQ:CRMT). Bares Capital Management has a $41.2 million position in the stock, comprising 2.5% of its 13F portfolio. The second largest stake is held by Yacktman Asset Management, led by Donald Yacktman, holding a $19.1 million position. Other professional money managers with similar optimism include Chuck Royce’s Royce & Associates, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. 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.