Do Hedge Funds Love Horizon Technology Finance Corp (HRZN)?

World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Horizon Technology Finance Corp (NASDAQ:HRZN) investors should pay attention to an increase in hedge fund interest lately. At the end of this article we will also compare HRZN to other stocks including Evans Bancorp Inc. (NYSEAMEX:EVBN), Unique Fabricating Inc (NYSEMKT:UFAB), and Alliance HealthCare Services, Inc. (NASDAQ:AIQ) to get a better sense of its popularity.

With all of this in mind, we’re going to view the key action encompassing Horizon Technology Finance Corp (NASDAQ:HRZN).

How are hedge funds trading Horizon Technology Finance Corp (NASDAQ:HRZN)?

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 133% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, John Fichthorn’s Dialectic Capital Management has the biggest position in Horizon Technology Finance Corp (NASDAQ:HRZN), worth close to $0.9 million, amounting to 0.3% of its total 13F portfolio. On Dialectic Capital Management’s heels is John Overdeck and David Siegel of Two Sigma Advisors, with a $0.9 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Israel Englander’s Millennium Management, Chao Ku’s Nine Chapters Capital Management and D E Shaw.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Dialectic Capital Management, managed by John Fichthorn, established the most valuable position in Horizon Technology Finance Corp (NASDAQ:HRZN). Dialectic Capital Management had $0.9 million invested in the company at the end of the quarter. Chao Ku’s Nine Chapters Capital Management also initiated a $0.2 million position during the quarter. The other funds with new positions in the stock are D E Shaw and Ken Griffin’s Citadel Investment Group.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Horizon Technology Finance Corp (NASDAQ:HRZN) but similarly valued. These stocks are Evans Bancorp Inc. (NYSEAMEX:EVBN), Unique Fabricating Inc (NYSEMKT:UFAB), Alliance HealthCare Services, Inc. (NASDAQ:AIQ), and Achaogen Inc (NASDAQ:AKAO). This group of stocks’ market caps match HRZN’s market cap.

As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $3 million in HRZN’s case. Achaogen Inc (NASDAQ:AKAO) is the most popular stock in this table. On the other hand Evans Bancorp Inc. (NYSEAMEX:EVBN) is the least popular one with only 4 bullish hedge fund positions. Horizon Technology Finance Corp (NASDAQ:HRZN) is not the most popular stock in terms of total hedge fund position size. In this regard AIQ might be a better candidate to consider a long position.