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Should You Buy Argan, Inc. (AGX)?

As industrywide interest jumped, some big names have been driving this bullishness. Welch Capital Partners, led by Leighton Welch, initiated the most valuable position in Argan, Inc. (NYSE:AGX). According to its latest 13F filing, the fund had $6.8 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also initiated a $5.6 million position during the quarter. The following funds were also among the new AGX investors: Chuck Royce’s Royce & Associates, George Hall’s Clinton Group, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Argan, Inc. (NYSE:AGX) but similarly valued. We will take a look at FelCor Lodging Trust Incorporated (NYSE:FCH), Cavco Industries, Inc. (NASDAQ:CVCO), Eros International plc (NYSE:EROS), and Noble Midstream Partners LP (NYSE:NBLX). All of these stocks’ market caps resemble AGX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FCH 17 122725 -4
CVCO 13 166370 -3
EROS 8 40946 1
NBLX 4 26092 4

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 $89 million. That figure was $108 million in AGX’s case. FelCor Lodging Trust Incorporated (NYSE:FCH) is the most popular stock in this table. On the other hand Noble Midstream Partners LP (NYSE:NBLX) is the least popular one with only 4 bullish hedge fund positions. Argan, Inc. (NYSE:AGX) 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. In this regard FCH might be a better candidate to consider taking a long position in.

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Disclosure: None