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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of ARC Document Solutions Inc (NYSE:ARC).
ARC Document Solutions Inc (NYSE:ARC) has experienced a decrease in hedge fund sentiment in recent months. ARC was in 5 hedge funds' portfolios at the end of March. There were 8 hedge funds in our database with ARC positions at the end of the previous quarter. Our calculations also showed that ARC isn't among the 30 most popular stocks among hedge funds (click for Q1 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 today’s marketplace there are numerous metrics stock market investors put to use to assess stocks. Two of the less utilized metrics are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outperform the broader indices by a very impressive amount (see the details here).
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Paul Tudor Jones of Tudor Investment Corp[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's review the latest hedge fund action surrounding ARC Document Solutions Inc (NYSE:ARC).
What does smart money think about ARC Document Solutions Inc (NYSE:ARC)?
At Q1's end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -38% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in ARC over the last 18 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in ARC Document Solutions Inc (NYSE:ARC), which was worth $2.6 million at the end of the third quarter. On the second spot was D E Shaw which amassed $0.2 million worth of shares. Two Sigma Advisors, Millennium Management, and Tudor Investment Corp 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 Renaissance Technologies allocated the biggest weight to ARC Document Solutions Inc (NYSE:ARC), around 0.0026% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, dishing out 0.0015 percent of its 13F equity portfolio to ARC.
Judging by the fact that ARC Document Solutions Inc (NYSE:ARC) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there were a few fund managers that elected to cut their positions entirely by the end of the first quarter. It's worth mentioning that David Harding's Winton Capital Management dropped the biggest investment of the 750 funds monitored by Insider Monkey, comprising an estimated $0.1 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund said goodbye to about $0 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 3 funds by the end of the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to ARC Document Solutions Inc (NYSE:ARC). These stocks are Cocrystal Pharma, Inc. (NASDAQ:COCP), Air T, Inc. (NASDAQ:AIRT), Houston Wire & Cable Company (NASDAQ:HWCC), and Blueknight Energy Partners L.P. (NASDAQ:BKEP). This group of stocks' market valuations are similar to ARC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position COCP,3,1381,1 AIRT,1,2586,0 HWCC,7,8095,0 BKEP,1,2193,0 Average,3,3564,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $3 million in ARC's case. Houston Wire & Cable Company (NASDAQ:HWCC) is the most popular stock in this table. On the other hand Air T, Inc. (NASDAQ:AIRT) is the least popular one with only 1 bullish hedge fund positions. ARC Document Solutions Inc (NYSE:ARC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on ARC as the stock returned 27.7% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.