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Should You Avoid ArcBest Corp (ARCB)?

After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards ArcBest Corp (NASDAQ:ARCB).

ArcBest Corp (NASDAQ:ARCB) has experienced a decrease in activity from the world’s largest hedge funds of late. ARCB was in 14 hedge funds’ portfolios at the end of the third quarter of 2019. There were 16 hedge funds in our database with ARCB positions at the end of the previous quarter. 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 below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

At the moment there are numerous signals market participants use to appraise publicly traded companies. A couple of the less known signals are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the best fund managers can outclass the S&P 500 by a very impressive margin (see the details here).

Chuck Royce

Chuck Royce of Royce & Associates

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s analyze the recent hedge fund action surrounding ArcBest Corp (NASDAQ:ARCB).

What have hedge funds been doing with ArcBest Corp (NASDAQ:ARCB)?

Heading into the fourth quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ARCB over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is ARCB A Good Stock To Buy?

More specifically, GMT Capital was the largest shareholder of ArcBest Corp (NASDAQ:ARCB), with a stake worth $14.6 million reported as of the end of September. Trailing GMT Capital was Royce & Associates, which amassed a stake valued at $13.3 million. D E Shaw, AQR Capital Management, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position GMT Capital allocated the biggest weight to ArcBest Corp (NASDAQ:ARCB), around 0.54% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.31 percent of its 13F equity portfolio to ARCB.

Seeing as ArcBest Corp (NASDAQ:ARCB) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few fund managers that elected to cut their entire stakes heading into Q4. Interestingly, Benjamin A. Smith’s Laurion Capital Management said goodbye to the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $0.5 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also said goodbye to its stock, about $0.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ArcBest Corp (NASDAQ:ARCB) but similarly valued. We will take a look at Vocera Communications Inc (NYSE:VCRA), Tupperware Brands Corporation (NYSE:TUP), Eagle Pharmaceuticals Inc (NASDAQ:EGRX), and Partner Communications Company Ltd (NASDAQ:PTNR). This group of stocks’ market valuations are similar to ARCB’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VCRA 9 26901 -5
TUP 14 112420 -3
EGRX 16 146879 -4
PTNR 1 12616 -1
Average 10 74704 -3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $76 million in ARCB’s case. Eagle Pharmaceuticals Inc (NASDAQ:EGRX) is the most popular stock in this table. On the other hand Partner Communications Company Ltd (NASDAQ:PTNR) is the least popular one with only 1 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ARCB wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ARCB were disappointed as the stock returned -5.2% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

Disclosure: None. This article was originally published at Insider Monkey.

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