While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding ArcBest Corp (NASDAQ:ARCB).
ArcBest Corp (NASDAQ:ARCB) has experienced an increase in hedge fund interest in recent months. ArcBest Corp (NASDAQ:ARCB) was in 23 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 13 hedge funds in our database with ARCB holdings at the end of March. Our calculations also showed that ARCB isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
To the average investor there are a lot of gauges investors put to use to evaluate stocks. A couple of the most innovative gauges are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace their index-focused peers by a very impressive margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to take a gander at the fresh hedge fund action regarding ArcBest Corp (NASDAQ:ARCB).
Do Hedge Funds Think ARCB Is A Good Stock To Buy Now?
At second quarter's end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 77% from the first quarter of 2020. By comparison, 12 hedge funds held shares or bullish call options in ARCB a year ago. With the smart money's sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of ArcBest Corp (NASDAQ:ARCB), with a stake worth $19.4 million reported as of the end of June. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $17.7 million. Scopus Asset Management, Brant Point Investment Management, and D E Shaw 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 Brant Point Investment Management allocated the biggest weight to ArcBest Corp (NASDAQ:ARCB), around 1.27% of its 13F portfolio. Elm Ridge Capital is also relatively very bullish on the stock, designating 1.14 percent of its 13F equity portfolio to ARCB.
Consequently, some big names have jumped into ArcBest Corp (NASDAQ:ARCB) headfirst. Scopus Asset Management, managed by Alexander Mitchell, initiated the most outsized call position in ArcBest Corp (NASDAQ:ARCB). Scopus Asset Management had $14.5 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $4.7 million position during the quarter. The following funds were also among the new ARCB investors: Israel Englander's Millennium Management, Brandon Osten's Venator Capital Management, and Alexander Mitchell's Scopus Asset Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as ArcBest Corp (NASDAQ:ARCB) but similarly valued. These stocks are The Liberty Braves Group (NASDAQ:BATRA), New Frontier Health Corporation (NYSE:NFH), Y-mAbs Therapeutics, Inc. (NASDAQ:YMAB), Encore Capital Group, Inc. (NASDAQ:ECPG), Brookdale Senior Living, Inc. (NYSE:BKD), Mission Produce, Inc. (NASDAQ:AVO), and Codexis, Inc. (NASDAQ:CDXS). This group of stocks' market values are closest to ARCB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BATRA,14,67131,2 NFH,17,368304,4 YMAB,9,68395,-4 ECPG,19,96838,1 BKD,32,499828,9 AVO,1,369,-2 CDXS,16,415578,3 Average,15.4,216635,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $105 million in ARCB's case. Brookdale Senior Living, Inc. (NYSE:BKD) is the most popular stock in this table. On the other hand Mission Produce, Inc. (NASDAQ:AVO) 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. Our overall hedge fund sentiment score for ARCB is 75.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on ARCB as the stock returned 52.1% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
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