Is Prospect Capital Corporation (NASDAQ:PSEC) a buy here? Hedge funds are in a bullish mood. The number of bullish hedge fund positions increased by 4 in recent months.
At the moment, there are a multitude of methods market participants can use to analyze their holdings. A couple of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite investment managers can trounce their index-focused peers by a superb amount (see just how much).
Equally as beneficial, optimistic insider trading activity is another way to parse down the investments you’re interested in. Just as you’d expect, there are plenty of reasons for an insider to get rid of shares of his or her company, but only one, very clear reason why they would buy. Several empirical studies have demonstrated the market-beating potential of this strategy if shareholders understand what to do (learn more here).
Now, it’s important to take a look at the recent action surrounding Prospect Capital Corporation (NASDAQ:PSEC).
Hedge fund activity in Prospect Capital Corporation (NASDAQ:PSEC)
In preparation for this year, a total of 9 of the hedge funds we track were long in this stock, a change of 80% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings significantly.
Of the funds we track, Ken Griffin’s Citadel Investment Group had the most valuable position in Prospect Capital Corporation (NASDAQ:PSEC), worth close to $33.7 million, comprising 0.1% of its total 13F portfolio. On Citadel Investment Group’s heels is Cliff Asness of AQR Capital Management, with a $8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that hold long positions include John Fichthorn’s Dialectic Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Robert B. Gillam’s McKinley Capital Management.
Consequently, key hedge funds have jumped into Prospect Capital Corporation (NASDAQ:PSEC) headfirst. Dialectic Capital Management, managed by John Fichthorn, established the biggest position in Prospect Capital Corporation (NASDAQ:PSEC). Dialectic Capital Management had 1.8 million invested in the company at the end of the quarter. Michael Johnston’s Steelhead Partners also initiated a $0.6 million position during the quarter. The other funds with new positions in the stock are David Costen Haley’s HBK Investments, Steven Cohen’s SAC Capital Advisors, and Joel Greenblatt’s Gotham Asset Management.
What have insiders been doing with Prospect Capital Corporation (NASDAQ:PSEC)?
Bullish insider trading is most useful when the company in question has experienced transactions within the past half-year. Over the last six-month time period, Prospect Capital Corporation (NASDAQ:PSEC) has experienced 3 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Prospect Capital Corporation (NASDAQ:PSEC). These stocks are Encore Capital Group, Inc. (NASDAQ:ECPG), Pacific Coast Oil Trust (NYSE:ROYT), Blackrock Kelso Capital Corp. (NASDAQ:BKCC), Triangle Capital Corporation (NYSE:TCAP), and The India Fund, Inc. (NYSE:IFN). All of these stocks are in the asset management industry and their market caps are closest to PSEC’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Encore Capital Group, Inc. (NASDAQ:ECPG) | 6 | 0 | 2 |
| Pacific Coast Oil Trust (NYSE:ROYT) | 1 | 0 | 0 |
| Blackrock Kelso Capital Corp. (NASDAQ:BKCC) | 5 | 0 | 2 |
| Triangle Capital Corporation (NYSE:TCAP) | 4 | 0 | 0 |
| The India Fund, Inc. (NYSE:IFN) | 2 | 0 | 0 |
With the returns demonstrated by the aforementioned strategies, retail investors should always monitor hedge fund and insider trading activity, and Prospect Capital Corporation (NASDAQ:PSEC) is no exception.
