Is Arch Resources, Inc. (ARCH) A Good Stock To Buy?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of more than 867 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Arch Resources, Inc. (NYSE:ARCH) based on those filings.

Is ARCH a good stock to buy? Arch Resources, Inc. (NYSE:ARCH) has seen an increase in support from the world’s most elite money managers lately. Arch Resources, Inc. (NYSE:ARCH) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 42. Our calculations also showed that ARCH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now we’re going to view the fresh hedge fund action surrounding Arch Resources, Inc. (NYSE:ARCH).

William Harnisch of Peconic Partners LLC

Do Hedge Funds Think ARCH Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ARCH over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Contrarian Capital held the most valuable stake in Arch Resources, Inc. (NYSE:ARCH), which was worth $66.2 million at the end of the third quarter. On the second spot was Maple Rock Capital which amassed $65.1 million worth of shares. Contrarius Investment Management, Luminus Management, and Skylands Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Contrarian Capital allocated the biggest weight to Arch Resources, Inc. (NYSE:ARCH), around 11.85% of its 13F portfolio. Luminus Management is also relatively very bullish on the stock, designating 11.55 percent of its 13F equity portfolio to ARCH.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Contrarius Investment Management, managed by Stephen Mildenhall, created the most valuable position in Arch Resources, Inc. (NYSE:ARCH). Contrarius Investment Management had $62 million invested in the company at the end of the quarter. Wayne Cooperman’s Cobalt Capital Management also initiated a $11.6 million position during the quarter. The other funds with brand new ARCH positions are Matthew Hulsizer’s PEAK6 Capital Management, Robert Bishop’s Impala Asset Management, and William Harnisch’s Peconic Partners LLC.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Arch Resources, Inc. (NYSE:ARCH) but similarly valued. We will take a look at Supernus Pharmaceuticals Inc (NASDAQ:SUPN), Golden Entertainment Inc (NASDAQ:GDEN), Northern Oil & Gas, Inc. (NYSE:NOG), Weis Markets, Inc. (NYSE:WMK), Lordstown Motors Corp. (NASDAQ:RIDE), Big Lots, Inc. (NYSE:BIG), and Eldorado Gold Corp (NYSE:EGO). This group of stocks’ market values are closest to ARCH’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.3 hedge funds with bullish positions and the average amount invested in these stocks was $124 million. That figure was $468 million in ARCH’s case. Golden Entertainment Inc (NASDAQ:GDEN) is the most popular stock in this table. On the other hand Lordstown Motors Corp. (NASDAQ:RIDE) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Arch Resources, Inc. (NYSE:ARCH) is more popular among hedge funds. Our overall hedge fund sentiment score for ARCH is 80.1. 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. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately ARCH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ARCH were disappointed as the stock returned -16.2% since the end of the third quarter (through 11/30) 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 since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.