Is Arctic Cat Inc (ACAT) A Good Stock to Buy?

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.

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