Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The time period between June 25 and the end of October was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of America’s Car-Mart, Inc. (NASDAQ:CRMT).
America’s Car-Mart, Inc. (NASDAQ:CRMT) was in 9 hedge funds’ portfolio at the end of the third quarter of 2015. CRMT investors should pay attention to lackluster hedge fund interest lately. There were only 9 hedge funds in our database with CRMT holdings at the end of the previous quarter. At the end of this article we will also compare CRMT to other stocks including ARC Document Solutions Inc (NYSE:ARC), Akebia Therapeutics Inc (NASDAQ:AKBA), and Tesco Corporation (USA) (NASDAQ:TESO) to get a better sense of its popularity.
At the moment there are a large number of methods shareholders can use to assess their stock investments. A pair of the most innovative methods are hedge fund and insider trading signals. Our research has shown that, historically, those who follow the top picks of the top money managers can trounce the broader indices by a very impressive amount (see the details here).
Now, we’re going to go over the recent action surrounding America’s Car-Mart, Inc. (NASDAQ:CRMT).
How have hedgies been trading America’s Car-Mart, Inc. (NASDAQ:CRMT)?
Heading into Q4, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully.
Small-cap investor Brian Bares’s Bares Capital Management had the biggest position in America’s Car-Mart, Inc. (NASDAQ:CRMT), worth close to $42.1 million, accounting for 4.2% of its total 13F portfolio. The second most bullish hedge fund manager is Royce & Associates, managed by Chuck Royce, which held a $13.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that are bullish on the stock contain quant fund Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Cliff Asness’s quant shop AQR Capital Management.
There wasn’t a lot of action in the stock during the third quarter. Lawrence Sapanski’s Scoria Capital sold its $1.1 million position whereas Ken Griffin’s Citadel initiated a tiny $600 thousand position.
Let’s also review hedge fund activity in other stocks similar to America’s Car-Mart, Inc. (NASDAQ:CRMT). These stocks are ARC Document Solutions Inc (NYSE:ARC), Akebia Therapeutics Inc (NASDAQ:AKBA), Tesco Corporation (USA) (NASDAQ:TESO), and Lumos Networks Corp (NASDAQ:LMOS). This group of stocks’ market valuations match CRMT’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. ARC Document Solutions Inc (NYSE:ARC) is the most popular stock in this table. On the other hand Tesco Corporation (USA) (NASDAQ:TESO) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks America’s Car-Mart, Inc. (NASDAQ:CRMT) is even less popular than TESO. Considering that hedge funds aren’t fond of this stock, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted. One thing that is positive about CRMT is Brian Bares’ large position.