Hedge funds are not perfect. They have their bad picks just like everyone else. Micron, a stock hedge funds have loved, lost 50% during the last 12 months ending in October 30. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% in the same time period, vs. a gain of 5.2% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Main Street Capital Corporation (NYSE:MAIN).
Is Main Street Capital Corporation (NYSE:MAIN) a buy, sell, or hold? Prominent investors are in a bullish mood. The number of long hedge fund positions inched up by 2 recently. It is quite surprising, especially because the shares of Main Street Capital Corporation (NYSE:MAIN) dropped 16.45% during the quarter. This contradictory behavior prompted us to find out more about the hedge funds that held stakes in the company at the end of the last quarter.
In order to understand more about the hedge fund sentiment, we will also compare Main Street Capital Corporation (NYSE:MAIN) to other stocks including Teekay Offshore Partners L.P. (NYSE:TOO), Kindred Healthcare, Inc. (NYSE:KND), and CONMED Corporation (NASDAQ:CNMD) to get a better sense of its popularity.
Follow Main Street Capital Corp (NYSE:MAIN)
Follow Main Street Capital Corp (NYSE:MAIN)
If you’d ask most market participants, hedge funds are assumed to be underperforming, outdated investment vehicles of the past. While there are more than 8000 funds with their doors open today, our researchers choose to focus on the moguls of this club, about 700 funds. These money managers watch over the majority of the smart money’s total asset base, and by following their finest equity investments, Insider Monkey has identified several investment strategies that have historically exceeded Mr. Market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Now, we’re going to analyze the new action encompassing Main Street Capital Corporation (NYSE:MAIN).
How have hedgies been trading Main Street Capital Corporation (NYSE:MAIN)?
At the end of September, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 40% from the second quarter. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Legg Mason Capital Management has the largest position in Main Street Capital Corporation (NYSE:MAIN), worth close to $8.9 million, comprising 0.2% of its total 13F portfolio. The second most bullish fund manager is Polar Capital, led by Brian Ashford-Russell and Tim Woolley, holding a $5.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish encompass Ken Griffin’s Citadel Investment Group, George Hall’s Clinton Group, and Robert B. Gillam’s McKinley Capital Management.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Clinton Group initiated the biggest position in Main Street Capital Corporation (NYSE:MAIN). Clinton Group had $0.8 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.3 million investment in the stock during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Main Street Capital Corporation (NYSE:MAIN). These stocks are Teekay Offshore Partners L.P. (NYSE:TOO), Kindred Healthcare, Inc. (NYSE:KND), CONMED Corporation (NASDAQ:CNMD), and Brink’s Co (NYSE:BCO). All of these stocks’ market caps are closest to Main Street Capital Corporation (NYSE:MAIN)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TOO | 6 | 40607 | 2 |
| KND | 35 | 406879 | 3 |
| CNMD | 19 | 249363 | 2 |
| BCO | 17 | 408917 | -6 |
As you can see, these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $276 million. That figure was $18 million in Main Street Capital Corporation (NYSE:MAIN)’s case. Kindred Healthcare, Inc. (NYSE:KND) is the most popular stock in this table. On the other hand, Teekay Offshore Partners L.P. (NYSE:TOO) is the least popular one with only 6 bullish hedge fund positions. Main Street Capital Corporation (NYSE:MAIN) 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. In this regard, Kindred Healthcare, Inc. (NYSE:KND) might be a better candidate to consider a long position.
