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Is Arctic Cat Inc (ACAT) Going to Burn These Hedge Funds?

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In the eyes of many market players, hedge funds are viewed as bloated, old financial tools of a forgotten age. Although there are more than 8,000 hedge funds with their doors open today, this site aim at the elite of this club, about 525 funds. It is assumed that this group has its hands on the majority of the smart money’s total assets, and by monitoring their highest quality stock picks, we’ve identified a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as necessary, optimistic insider trading activity is another way to analyze the stock market universe. As the old adage goes: there are many incentives for a bullish insider to downsize shares of his or her company, but just one, very obvious reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” understand what to do (learn more here).

Keeping this in mind, we’re going to discuss the newest info surrounding Arctic Cat Inc (NASDAQ:ACAT).

Arctic Cat Inc (NASDAQ:ACAT)

What have hedge funds been doing with Arctic Cat Inc (NASDAQ:ACAT)?

In preparation for the third quarter, a total of 9 of the hedge funds we track held long positions in this stock, a change of -10% from the first quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully.

According to our 13F database, Chuck Royce’s Royce & Associates had the largest position in Arctic Cat Inc (NASDAQ:ACAT), worth close to $18.1 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by Cliff Asness of AQR Capital Management, with a $8.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Robert Bishop’s Impala Asset Management, Joseph A. Jolson’s Harvest Capital Strategies and Neil Chriss’s Hutchin Hill Capital.

Due to the fact Arctic Cat Inc (NASDAQ:ACAT) has faced declining interest from the smart money’s best and brightest, logic holds that there exists a select few hedgies who sold off their full holdings last quarter. Intriguingly, Boaz Weinstein’s Saba Capital cut the largest stake of the 450+ funds we monitor, comprising close to $6 million in stock. Richard Driehaus’s fund, Driehaus Capital, also said goodbye to its stock, about $2.1 million worth. These transactions are interesting, as total hedge fund interest was cut by 1 funds last quarter.

Insider trading activity in Arctic Cat Inc (NASDAQ:ACAT)

Legal insider trading, particularly when it’s bullish, is best served when the primary stock in question has experienced transactions within the past 180 days. Over the last half-year time period, Arctic Cat Inc (NASDAQ:ACAT) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Arctic Cat Inc (NASDAQ:ACAT). These stocks are Polaris Industries Inc. (NYSE:PII), Thor Industries, Inc. (NYSE:THO), Drew Industries, Inc. (NYSE:DW), Federal Signal Corporation (NYSE:FSS), and Winnebago Industries, Inc. (NYSE:WGO). This group of stocks are in the recreational vehicles industry and their market caps match ACAT’s market cap.

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