Author of an article says Hedge Funds missed out on ARC’s recent winning streak

This morning, I found an article, on http://community.nasdaq.com, that mentions American Reprographics Co (ARC), and, below, I’ve re-published a portion of that article (the lead part of the article and the paragraph that specifically mentions ARC):

"Underestimated Stocks: Hedge Funds Missed Out on These 9 Winning Streaks"

(Written by Alexander Crawford, list compiled by Eben Esterhuizen, CFA. Data from 11/14. Institutional data sourced from Fidelity, price data sourced from Yahoo! Finance.)

Analyzing the buying trends of “big money” investors like hedge funds becomes especially interesting when compared with price performance. Have hedge funds been making winning positions? If not, it opens up the question of whether hedge funds have been wrong, or whether they know something the market hasn’t yet realized.

Winning streaks are one interesting angle to consider price performance.

Stocks with a persistence of days in which they recently outperformed the S&P 500 and little persistence in recently underperforming the S&P 500 benchmark are very likely surrounded by positive market sentiment.

The Screen

To use these concepts, we ran a screen on recently “winning” stocks: those that have seen a persistence of days in which the stock beat the S&P 500 benchmark over the last month and little persistence in underperforming the S&P 500, i.e. long winning streaks and short losing streaks, as measured by a ratio of the longest winning streak to the longest losing streak.

We screened these winners for those seeing the opposite sentiment (bearishness) from institutional investors like hedge funds, with significant net institutional selling over the current quarter.

Clearly hedge funds disagree with the broader market – do you think hedge funds are wrong, or do they know something the market hasn’t yet priced in?

American Reprographics Co. (ARC): Provides business-to-business document management services. Net institutional sales in the current quarter at 2.0M shares, which represents about 6.24% of the company's float of 32.05M shares. The stock's average daily alpha vs. the S&P500 index stands at 0.76% (measured close to close, over the last month). During this period, the longest winning streak lasted 5 days (i.e. the stock's daily returns outperformed the S&P 500 for 5 consecutive days). The longest losing streak lasted 2 days (i.e. a win streak / losing streak ratio of 2.5).