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Hedge Funds Are Selling Arch Coal Inc (ACI)

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Is Arch Coal Inc (NYSE:ACI) a sell?

To many of your peers, hedge funds are viewed as overrated, old investment vehicles of an era lost to time. Although there are over 8,000 hedge funds with their doors open currently, this site looks at the leaders of this club, about 525 funds. Analysts calculate that this group has its hands on the majority of all hedge funds’ total assets, and by keeping an eye on their best investments, we’ve brought to light a number of investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Equally as key, bullish insider trading activity is another way to analyze the marketplace. There are a variety of reasons for a corporate insider to downsize shares of his or her company, but just one, very simple reason why they would buy. Various empirical studies have demonstrated the impressive potential of this tactic if you understand where to look (learn more here).

Thus, we’re going to examine the latest info surrounding Arch Coal Inc (NYSE:ACI).

What have hedge funds been doing with Arch Coal Inc (NYSE:ACI)?

At the end of the second quarter, a total of 19 of the hedge funds we track were long in this stock, a change of -5% from the first quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes meaningfully.

Arch Coal Inc (NYSE:ACI)According to our 13F database, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Arch Coal Inc (NYSE:ACI). Citadel Investment Group has a $13.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Citadel Investment Group’s heels is Brigade Capital, managed by Don Morgan, which held a $7.1 million call position; 0.2% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Gregory Fraser Rudolph Kluiber and Timothy Krochuk’s GRT Capital Partners.

Because Arch Coal Inc (NYSE:ACI) has experienced declining interest from the top-tier hedge fund industry, logic holds that there exists a select few money managers who sold off their full holdings in Q1. It’s worth mentioning that Jeffrey Vinik’s Vinik Asset Management said goodbye to the biggest position of the 450+ funds we monitor, totaling an estimated $34.7 million in stock, and T Boone Pickens of BP Capital was right behind this move, as the fund cut about $3.5 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds in Q1.

What have insiders been doing with Arch Coal Inc (NYSE:ACI)?

Legal insider trading, particularly when it’s bullish, is most useful when the company in question has seen transactions within the past 180 days. Over the latest six-month time frame, Arch Coal Inc (NYSE:ACI) has seen 1 unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Arch Coal Inc (NYSE:ACI). These stocks are Stillwater Mining Company (NYSE:SWC), AMCOL International Corporation (NYSE:ACO), Globe Specialty Metals, Inc. (NASDAQ:GSM), U.S. Silica Holdings Inc (NYSE:SLCA), and Cloud Peak Energy Inc. (NYSE:CLD). All of these stocks are in the industrial metals & minerals industry and their market caps match ACI’s market cap.

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