Hedge Funds Are Betting On ArcBest Corp (ARCB)

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

ArcBest Corp (NASDAQ:ARCB) shareholders have witnessed an increase in hedge fund interest lately. ARCB was in 13 hedge funds’ portfolios at the end of the third quarter of 2016. There were 11 hedge funds in our database with ARCB positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as PJT Partners Inc (NYSE:PJT), Bazaarvoice Inc (NASDAQ:BV), and Unisys Corporation (NYSE:UIS) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What does the smart money think about ArcBest Corp (NASDAQ:ARCB)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, up by 18% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in ARCB over the last 5 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, holds the biggest position in ArcBest Corp (NASDAQ:ARCB). Renaissance Technologies has a $9.2 million position in the stock. Sitting at the No. 2 spot is John W. Rogers of Ariel Investments, with a $3.6 million position. Some other members of the smart money that hold long positions encompass Cliff Asness’ AQR Capital Management, and John Overdeck And David Siegel’s Two Sigma Advisors. We should note that SG Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As industrywide interest jumped, key money managers have been driving this bullishness. Folger Hill Asset Management, led by Solomon Kumin, assembled the most outsized position in ArcBest Corp (NASDAQ:ARCB). Folger Hill Asset Management had $2.9 million invested in the company at the end of the quarter. Ken Grossman and Glen Schneider’s SG Capital Management also made a $1.9 million investment in the stock during the quarter. The other funds with brand new ARCB positions are Ken Griffin’s Citadel Investment Group, and D E Shaw.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ArcBest Corp (NASDAQ:ARCB) but similarly valued. These stocks are PJT Partners Inc (NYSE:PJT), Bazaarvoice Inc (NASDAQ:BV), Unisys Corporation (NYSE:UIS), and Kimball International Inc (NASDAQ:KBAL). This group of stocks’ market caps resemble ARCB’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 $101 million. That figure was $27 million in ARCB’s case. Bazaarvoice Inc (NASDAQ:BV) is the most popular stock in this table. On the other hand Kimball International Inc (NASDAQ:KBAL) is the least popular one with only 9 bullish hedge fund positions. ArcBest Corp (NASDAQ:ARCB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BV might be a better candidate to consider taking a long position in.

Disclosure: None