In this article we will take a look at whether hedge funds think ArcBest Corp (NASDAQ:ARCB) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is ARCB a good stock to buy now? ArcBest Corp (NASDAQ:ARCB) investors should be aware of an increase in support from the world’s most elite money managers in recent months. ArcBest Corp (NASDAQ:ARCB) was in 17 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 19. There were 12 hedge funds in our database with ARCB holdings at the end of June. Our calculations also showed that ARCB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s check out the recent hedge fund action encompassing ArcBest Corp (NASDAQ:ARCB).
Do Hedge Funds Think ARCB Is A Good Stock To Buy Now?
At the end of September, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 42% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ARCB over the last 21 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the number one position in ArcBest Corp (NASDAQ:ARCB), worth close to $14.7 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by D E Shaw, managed by D. E. Shaw, which holds a $12.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism contain Chuck Royce’s Royce & Associates, Richard Driehaus’s Driehaus Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Driehaus Capital allocated the biggest weight to ArcBest Corp (NASDAQ:ARCB), around 0.15% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.12 percent of its 13F equity portfolio to ARCB.
As aggregate interest increased, key money managers were breaking ground themselves. Driehaus Capital, managed by Richard Driehaus, established the most outsized position in ArcBest Corp (NASDAQ:ARCB). Driehaus Capital had $7.4 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $0.5 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Matthew Hulsizer’s PEAK6 Capital Management, and Frederick DiSanto’s Ancora Advisors.
Let’s check out hedge fund activity in other stocks similar to ArcBest Corp (NASDAQ:ARCB). These stocks are Cellectis SA (NASDAQ:CLLS), 1st Source Corporation (NASDAQ:SRCE), RAPT Therapeutics, Inc. (NASDAQ:RAPT), Akouos, Inc. (NASDAQ:AKUS), Gogo Inc (NASDAQ:GOGO), World Acceptance Corp. (NASDAQ:WRLD), and PAE Incorporated (NASDAQ:PAE). This group of stocks’ market valuations are closest to ARCB’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $66 million in ARCB’s case. PAE Incorporated (NASDAQ:PAE) is the most popular stock in this table. On the other hand Cellectis SA (NASDAQ:CLLS) is the least popular one with only 8 bullish hedge fund positions. ArcBest Corp (NASDAQ:ARCB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ARCB is 86.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on ARCB as the stock returned 35.1% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.