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Arch Coal Inc (NYSE:ACI): Hedge Funds and Insiders Are Bullish, What Should You Do?

Arch Coal Inc (NYSE:ACI) was in 25 hedge funds’ portfolio at the end of December. ACI investors should pay attention to an increase in enthusiasm from smart money recently. There were 22 hedge funds in our database with ACI holdings at the end of the previous quarter.

Arch Coal Inc (ACI)

In the 21st century investor’s toolkit, there are a multitude of methods investors can use to monitor their holdings. Some of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best fund managers can outperform the broader indices by a solid amount (see just how much).

Just as key, optimistic insider trading sentiment is another way to parse down the stock market universe. There are lots of incentives for a bullish insider to drop shares of his or her company, but just one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this strategy if investors understand where to look (learn more here).

Consequently, we’re going to take a look at the latest action regarding Arch Coal Inc (NYSE:ACI).

How are hedge funds trading Arch Coal Inc (NYSE:ACI)?

At the end of the fourth quarter, a total of 25 of the hedge funds we track were bullish in this stock, a change of 14% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly.

According to our comprehensive database, Jeffrey Vinik’s Vinik Asset Management had the biggest position in Arch Coal Inc (NYSE:ACI), worth close to $38 million, comprising 1.1% of its total 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $32 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include George Soros’s Soros Fund Management, John Hurley’s Cavalry Asset Management and Thomas Lenox Kempner’s Davidson Kempner.

With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Soros Fund Management, managed by George Soros, established the largest position in Arch Coal Inc (NYSE:ACI). Soros Fund Management had 19 million invested in the company at the end of the quarter. John Hurley’s Cavalry Asset Management also made a $14 million investment in the stock during the quarter. The following funds were also among the new ACI investors: Thomas Lenox Kempner’s Davidson Kempner, SAC Subsidiary’s CR Intrinsic Investors, and Glenn Russell Dubin’s Highbridge Capital Management.

Insider trading activity in Arch Coal Inc (NYSE:ACI)

Bullish insider trading is at its handiest when the primary stock in question has experienced transactions within the past half-year. Over the latest 180-day time frame, Arch Coal Inc (NYSE:ACI) has experienced 1 unique insiders buying, and zero insider sales (see the details of insider trades here).

With the returns demonstrated by the aforementioned research, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Arch Coal Inc (NYSE:ACI) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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