Is Archer Aviation Inc. (ACHR) Going to Burn These Hedge Funds?

Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to the smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Archer Aviation Inc. (NYSE:ACHR)? The smart money sentiment can provide an answer to this question.

Is Archer Aviation Inc. (NYSE:ACHR) a bargain? Investors who are in the know were in an optimistic mood. The number of bullish hedge fund positions went up by 28 recently. Archer Aviation Inc. (NYSE:ACHR) was in 28 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that ACHR 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. With all of this in mind let’s take a gander at the fresh hedge fund action regarding Archer Aviation Inc. (NYSE:ACHR).

Dan Loeb of Third Point

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

Heading into the fourth quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 28 from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in ACHR a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Archer Aviation Inc. (NYSE:ACHR) was held by ARK Investment Management, which reported holding $51 million worth of stock at the end of September. It was followed by Third Point with a $22.2 million position. Other investors bullish on the company included Iridian Asset Management, Senator Investment Group, and XN Exponent Advisors. In terms of the portfolio weights assigned to each position Deep Field Asset Management allocated the biggest weight to Archer Aviation Inc. (NYSE:ACHR) , around 2.71% of its 13F portfolio. Iridian Asset Management is also relatively very bullish on the stock, setting aside 0.6 percent of its 13F equity portfolio to ACHR.

As one would reasonably expect, key money managers have jumped into Archer Aviation Inc. (NYSE:ACHR) headfirst. ARK Investment Management, managed by Catherine D. Wood, created the largest position in Archer Aviation Inc. (NYSE:ACHR) . ARK Investment Management had $51 million invested in the company at the end of the quarter. Dan Loeb’s Third Point also initiated a $22.2 million position during the quarter. The other funds with brand new ACHR positions are David Cohen and Harold Levy’s Iridian Asset Management, Doug Silverman and Alexander Klabin’s Senator Investment Group, and Gaurav Kapadia’s XN Exponent Advisors.

Let’s also examine hedge fund activity in other stocks similar to Archer Aviation Inc. (NYSE:ACHR) . We will take a look at Rover Group Inc. (NASDAQ:ROVR), World Fuel Services Corporation (NYSE:INT), ACM Research, Inc. (NASDAQ:ACMR), Telecom Argentina S.A. (NYSE:TEO), Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), ADC Therapeutics SA (NYSE:ADCT), and Boise Cascade Co (NYSE:BCC). This group of stocks’ market values resemble ACHR’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $191 million. That figure was $174 million in ACHR’s case. Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) is the most popular stock in this table. On the other hand ADC Therapeutics SA (NYSE:ADCT) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Archer Aviation Inc. (NYSE:ACHR) is more popular among hedge funds. Our overall hedge fund sentiment score for ACHR is 90. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately ACHR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ACHR were disappointed as the stock returned -20.8% since the end of the third quarter (through 12/9) 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.