The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Solar Capital Ltd. (NASDAQ:SLRC).
Is Solar Capital Ltd. (NASDAQ:SLRC) a great stock to buy now? Investors who are in the know are in a bullish mood. The number of bullish hedge fund positions improved by 1 lately. Our calculations also showed that SLRC isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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.
Let’s take a gander at the new hedge fund action regarding Solar Capital Ltd. (NASDAQ:SLRC).
What have hedge funds been doing with Solar Capital Ltd. (NASDAQ:SLRC)?
Heading into the first quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the second quarter of 2018. On the other hand, there were a total of 11 hedge funds with a bullish position in SLRC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Clough Capital Partners, managed by Charles Clough, holds the number one position in Solar Capital Ltd. (NASDAQ:SLRC). Clough Capital Partners has a $16 million position in the stock, comprising 1.9% of its 13F portfolio. Coming in second is Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, which holds a $9.7 million position; 0.1% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Robert B. Gillam’s McKinley Capital Management and Noam Gottesman’s GLG Partners.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, established the most valuable position in Solar Capital Ltd. (NASDAQ:SLRC). ExodusPoint Capital had $0.2 million invested in the company at the end of the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Solar Capital Ltd. (NASDAQ:SLRC) but similarly valued. These stocks are Globalstar, Inc. (PINK:GSAT), MBIA Inc. (NYSE:MBI), Republic Bancorp, Inc. KY (NASDAQ:RBCAA), and Kforce Inc. (NASDAQ:KFRC). This group of stocks’ market values resemble SLRC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GSAT | 12 | 141376 | -10 |
| MBI | 18 | 277243 | -1 |
| RBCAA | 7 | 14532 | 0 |
| KFRC | 21 | 74074 | 1 |
| Average | 14.5 | 126806 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $127 million. That figure was $46 million in SLRC’s case. Kforce Inc. (NASDAQ:KFRC) is the most popular stock in this table. On the other hand Republic Bancorp, Inc. KY (NASDAQ:RBCAA) is the least popular one with only 7 bullish hedge fund positions. Solar Capital Ltd. (NASDAQ:SLRC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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. Unfortunately SLRC wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); SLRC investors were disappointed as the stock returned 13.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
