Is Arena Pharmaceuticals, Inc. (ARNA) A Good Stock To Buy?

Because Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of hedge funds that decided to sell off their entire stakes last quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group said goodbye to the biggest stake of all the hedgies monitored by Insider Monkey, worth close to $0.2 million in call options. Matthew Tewksbury’s fund, Stevens Capital Management, also dumped its stock, about $0 million worth.

Let’s also examine hedge fund activity in other stocks similar to Arena Pharmaceuticals, Inc. (NASDAQ:ARNA). We will take a look at Landauer, Inc. (NYSE:LDR), Advaxis, Inc. (NASDAQ:ADXS), China Yuchai International Limited (NYSE:CYD), and Resolute Forest Products Inc (NYSE:RFP). This group of stocks’ market values match ARNA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LDR 8 62435 2
ADXS 14 116264 -3
CYD 6 46796 -1
RFP 16 202608 0

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 $107 million. That figure was $33 million in ARNA’s case. Resolute Forest Products Inc (NYSE:RFP) is the most popular stock in this table. On the other hand China Yuchai International Limited (NYSE:CYD) is the least popular one with only 6 bullish hedge fund positions. Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) 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 RFP might be a better candidate to consider taking a long position in.