With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter. One of these stocks was Hercules Capital, Inc. (NYSE:HTGC).
Hercules Capital, Inc. (NYSE:HTGC) investors should pay attention to an increase in enthusiasm from smart money in recent months. HTGC was in 11 hedge funds’ portfolios at the end of December. There were 10 hedge funds in our database with HTGC holdings at the end of the previous quarter. Our calculations also showed that HTGC isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a glance at the latest hedge fund action regarding Hercules Capital, Inc. (NYSE:HTGC).
What have hedge funds been doing with Hercules Capital, Inc. (NYSE:HTGC)?
At Q4’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the second quarter of 2018. By comparison, 9 hedge funds held shares or bullish call options in HTGC a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, McKinley Capital Management was the largest shareholder of Hercules Capital, Inc. (NYSE:HTGC), with a stake worth $4.5 million reported as of the end of December. Trailing McKinley Capital Management was Millennium Management, which amassed a stake valued at $3.8 million. Polaris Capital Management, D E Shaw, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Now, specific money managers were breaking ground themselves. BlueCrest Capital Mgmt., managed by Michael Platt and William Reeves, initiated the largest position in Hercules Capital, Inc. (NYSE:HTGC). BlueCrest Capital Mgmt. had $0.3 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $0.3 million position during the quarter. The only other fund with a new position in the stock is Emanuel J. Friedman’s EJF Capital.
Let’s go over hedge fund activity in other stocks similar to Hercules Capital, Inc. (NYSE:HTGC). We will take a look at BrightView Holdings, Inc. (NYSEhttps://www.insidermonkey.com/blog/here-is-what-hedge-funds-think-about-hercules-capital-inc-htgc-743467/:BV), Saul Centers Inc (NYSE:BFS), Rowan Companies plc (NYSE:RDC), and Core-Mark Holding Company, Inc. (NASDAQ:CORE). This group of stocks’ market values are similar to HTGC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BV | 10 | 36258 | -3 |
| BFS | 7 | 25253 | 0 |
| RDC | 18 | 356998 | -13 |
| CORE | 20 | 39166 | 1 |
| Average | 13.75 | 114419 | -3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $18 million in HTGC’s case. Core-Mark Holding Company, Inc. (NASDAQ:CORE) is the most popular stock in this table. On the other hand Saul Centers Inc (NYSE:BFS) is the least popular one with only 7 bullish hedge fund positions. Hercules Capital, Inc. (NYSE:HTGC) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on HTGC, though not to the same extent, as the stock returned 17.5% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
