MCG Capital Corporation (NASDAQ:MCGC) shareholders have witnessed a decrease in hedge fund interest recently.
In the financial world, there are a multitude of metrics shareholders can use to analyze stocks. A duo 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 significant amount (see just how much).
Just as important, optimistic insider trading activity is another way to parse down the stock market universe. As the old adage goes: there are many stimuli for an executive to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of empirical studies have demonstrated the market-beating potential of this method if investors know what to do (learn more here).
Consequently, it’s important to take a look at the recent action surrounding MCG Capital Corporation (NASDAQ:MCGC).
Hedge fund activity in MCG Capital Corporation (NASDAQ:MCGC)
In preparation for this quarter, a total of 7 of the hedge funds we track were bullish in this stock, a change of 0% from the first quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably.
Of the funds we track, North Run Capital, managed by Thomas Ellis and Todd Hammer, holds the largest position in MCG Capital Corporation (NASDAQ:MCGC). North Run Capital has a $15.5 million position in the stock, comprising 1.9% of its 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which held a $2.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and Matthew Hulsizer’s PEAK6 Capital Management.
Because MCG Capital Corporation (NASDAQ:MCGC) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few hedge funds that slashed their positions entirely last quarter. At the top of the heap, Matthew Hulsizer’s PEAK6 Capital Management cut the largest position of the 450+ funds we track, worth an estimated $0.1 million in stock. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity in MCG Capital Corporation (NASDAQ:MCGC)
Insider trading activity, especially when it’s bullish, is most useful when the company in focus has experienced transactions within the past half-year. Over the latest half-year time frame, MCG Capital Corporation (NASDAQ:MCGC) has seen 2 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to MCG Capital Corporation (NASDAQ:MCGC). These stocks are Pzena Investment Management, Inc. (NYSE:PZN), PennantPark Investment Corp. (NASDAQ:PNNT), Noah Holdings Limited (ADR) (NYSE:NOAH), THL Credit, Inc. (NASDAQ:TCRD), and Westwood Holdings Group, Inc. (NYSE:WHG). This group of stocks are in the asset management industry and their market caps are similar to MCGC’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Pzena Investment Management, Inc. (NYSE:PZN) | 4 | 0 | 0 |
| PennantPark Investment Corp. (NASDAQ:PNNT) | 9 | 1 | 0 |
| Noah Holdings Limited (ADR) (NYSE:NOAH) | 6 | 0 | 0 |
| THL Credit, Inc. (NASDAQ:TCRD) | 10 | 5 | 0 |
| Westwood Holdings Group, Inc. (NYSE:WHG) | 5 | 0 | 5 |
With the returns demonstrated by the aforementioned time-tested strategies, retail investors must always pay attention to hedge fund and insider trading sentiment, and MCG Capital Corporation (NASDAQ:MCGC) applies perfectly to this mantra.
