You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Arctic Cat Inc (NASDAQ:ACAT) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of September, same as at the end of June. 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 Abeona Therapeutics Inc (NASDAQ:ABEO), Agile Therapeutics Inc (NASDAQ:AGRX), and Hornbeck Offshore Services, Inc. (NYSE:HOS) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Hedge fund activity in Arctic Cat Inc (NASDAQ:ACAT)
Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in ACAT at the beginning of this year, so there’s been a 25% reduction in the number of bullish positions in 2016. 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 Insider Monkey’s hedge fund database, Edward Goodnow’s Goodnow Investment Group has the number one position in Arctic Cat Inc (NASDAQ:ACAT), worth close to $7.2 million, accounting for 1.7% of its total 13F portfolio. The second most bullish fund manager is Brandon Osten of Venator Capital Management, with a $2.9 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Other peers with similar optimism include Terence Hogan’s Addison Clark Management, Peter Schliemann’s Rutabaga Capital Management, and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.
We view hedge fund activity in the stock as unfavorable, but in this case there was only a single hedge fund selling its entire position: Renaissance Technologies, one of the largest hedge funds in the world. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Rutabaga Capital Management).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Arctic Cat Inc (NASDAQ:ACAT) but similarly valued. These stocks are Abeona Therapeutics Inc (NASDAQ:ABEO), Agile Therapeutics Inc (NASDAQ:AGRX), Hornbeck Offshore Services, Inc. (NYSE:HOS), and Dimension Therapeutics Inc (NASDAQ:DMTX). This group of stocks’ market valuations are closest to ACAT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABEO | 13 | 39758 | 4 |
| AGRX | 9 | 43289 | 1 |
| HOS | 14 | 78226 | -1 |
| DMTX | 7 | 71354 | -1 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $14 million in ACAT’s case. Hornbeck Offshore Services, Inc. (NYSE:HOS) is the most popular stock in this table. On the other hand Dimension Therapeutics Inc (NASDAQ:DMTX) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Arctic Cat Inc (NASDAQ:ACAT) is even less popular than DMTX. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock.
Disclosure: None
