Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Blackstone / GSO Strategic Credit Fund (NYSE:BGB) investors should be aware of an increase in hedge fund sentiment recently. BGB was in 7 hedge funds’ portfolios at the end of the third quarter of 2015. There were 4 hedge funds in our database with BGB holdings at the end of the previous quarter. At the end of this article we will also compare BGB to other stocks including Foundation Medicine Inc (NASDAQ:FMI), Quidel Corporation (NASDAQ:QDEL), and Raven Industries, Inc. (NASDAQ:RAVN) to get a better sense of its popularity.
Follow Blackstone Strategic Credit 2027 Term Fund (NYSE:BGB)
Follow Blackstone Strategic Credit 2027 Term Fund (NYSE:BGB)
To most stock holders, hedge funds are assumed to be slow, old investment tools of years past. While there are more than 8000 funds with their doors open today, We hone in on the elite of this club, about 700 funds. These money managers manage bulk of the hedge fund industry’s total asset base, and by shadowing their top picks, Insider Monkey has spotted a few investment strategies that have historically defeated Mr. Market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per year for a decade in their back tests.
With all of this in mind, let’s check out the key action surrounding Blackstone / GSO Strategic Credit Fund (NYSE:BGB).
What does the smart money think about Blackstone / GSO Strategic Credit Fund (NYSE:BGB)?
At the Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 75% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Boaz Weinstein’s Saba Capital has the number one position in Blackstone / GSO Strategic Credit Fund (NYSE:BGB), worth close to $37 million, comprising 2.9% of its total 13F portfolio. On Saba Capital’s heels is Mariner Investment Group, managed by William Michaelcheck, which holds a $11.2 million position; 2.3% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism include James Dondero’s Highland Capital Management and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
As aggregate interest increased, specific money managers have been driving this bullishness. Laurion Capital Management, managed by Benjamin A. Smith, initiated the biggest position in Blackstone / GSO Strategic Credit Fund (NYSE:BGB). Laurion Capital Management had $1.3 million invested in the company at the end of the quarter. Allan Teh’s Kamunting Street Capital also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new BGB position is Ken Griffin’s Citadel Investment Group.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Blackstone / GSO Strategic Credit Fund (NYSE:BGB) but similarly valued. We will take a look at Foundation Medicine Inc (NASDAQ:FMI), Quidel Corporation (NASDAQ:QDEL), Raven Industries, Inc. (NASDAQ:RAVN), and Chegg Inc (NYSE:CHGG). This group of stocks’ market values are similar to BGB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FMI | 7 | 46856 | 0 |
| QDEL | 12 | 29063 | -3 |
| RAVN | 9 | 46272 | 0 |
| CHGG | 12 | 85934 | -4 |
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 $52 million, close to the $51 million in BGB’s case. Quidel Corporation (NASDAQ:QDEL) is the most popular stock in this table, while Foundation Medicine Inc (NASDAQ:FMI) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Blackstone / GSO Strategic Credit Fund (NYSE:BGB) is even less popular than FMI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
