Is Arconic Corporation (ARNC) A Good Stock To Buy?

We at Insider Monkey have gone over 867 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Arconic Corporation (NYSE:ARNC) based on that data.

Is ARNC a good stock to buy? Arconic Corporation (NYSE:ARNC) investors should be aware of a decrease in enthusiasm from smart money in recent months. Arconic Corporation (NYSE:ARNC) was in 26 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 46. There were 30 hedge funds in our database with ARNC holdings at the end of June. Our calculations also showed that ARNC 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. Keeping this in mind we’re going to check out the fresh hedge fund action regarding Arconic Corporation (NYSE:ARNC).

Didric Cederholm of Lion Point Capital

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

Heading into the fourth quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in ARNC over the last 25 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Orbis Investment Management, managed by William B. Gray, holds the biggest position in Arconic Corporation (NYSE:ARNC). Orbis Investment Management has a $317.9 million position in the stock, comprising 2.2% of its 13F portfolio. Coming in second is Elliott Investment Management, led by Paul Singer, holding a $262.7 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish comprise Didric Cederholm’s Lion Point, David Rosen’s Rubric Capital Management and Ken Fisher’s Fisher Asset Management. In terms of the portfolio weights assigned to each position Brightline Capital allocated the biggest weight to Arconic Corporation (NYSE:ARNC), around 11.73% of its 13F portfolio. Lion Point is also relatively very bullish on the stock, designating 7.17 percent of its 13F equity portfolio to ARNC.

Since Arconic Corporation (NYSE:ARNC) has experienced a decline in interest from the smart money, it’s safe to say that there is a sect of funds that elected to cut their full holdings last quarter. Interestingly, Richard Driehaus’s Driehaus Capital said goodbye to the largest investment of the 750 funds watched by Insider Monkey, comprising about $13.1 million in stock. Steven Tananbaum’s fund, GoldenTree Asset Management, also said goodbye to its stock, about $13 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 4 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Arconic Corporation (NYSE:ARNC) but similarly valued. These stocks are Galapagos NV (NASDAQ:GLPG), Blackbaud, Inc. (NASDAQ:BLKB), ContextLogic Inc. (NASDAQ:WISH), AAON, Inc. (NASDAQ:AAON), Itron, Inc. (NASDAQ:ITRI), Assured Guaranty Ltd. (NYSE:AGO), and Skyline Champion Corporation (NYSE:SKY). All of these stocks’ market caps resemble ARNC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $204 million. That figure was $764 million in ARNC’s case. Skyline Champion Corporation (NYSE:SKY) is the most popular stock in this table. On the other hand ContextLogic Inc. (NASDAQ:WISH) is the least popular one with only 14 bullish hedge fund positions. Arconic Corporation (NYSE:ARNC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ARNC is 68. 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 positive signal but 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately ARNC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ARNC were disappointed as the stock returned -5.4% since the end of September (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 many of these stocks already outperformed the market since 2019.

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