Is Arcos Dorados Holding Inc (ARCO) A Good Stock To Buy?

As aggregate interest increased, specific money managers were leading the bulls’ herd. Armistice Capital, managed by Steven Boyd, assembled the largest new position in Arcos Dorados Holding Inc (NYSE:ARCO). The fund reported a $3.8 million investment in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $0.2 million position during the quarter. The following funds were also among the new ARCO investors: David Costen Haley’s HBK Investments and Ken Griffin’s Citadel Investment Group.

Let’s go over hedge fund activity in other stocks similar to Arcos Dorados Holding Inc (NYSE:ARCO). We will take a look at Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH), John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS), Glu Mobile Inc. (NASDAQ:GLUU), and Motorcar Parts of America, Inc. (NASDAQ:MPAA). All of these stocks’ market caps are similar to ARCO’s market cap.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $17 million in ARCO’s case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Arcos Dorados Holding Inc (NYSE:ARCO) is clearly lagging behind in terms of both the number of long positions and the size of the hedge funds investments. 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. 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.