Is Medley Capital Corp (MCC) Going to Burn These Hedge Funds?

Is it smart to be bullish on Medley Capital Corp (NYSE:MCC)?

In the 21st century investor’s toolkit, there are tons of gauges shareholders can use to watch Mr. Market. A duo of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite fund managers can outclass the broader indices by a healthy margin (see just how much).

Just as crucial, positive insider trading sentiment is a second way to look at the stock market universe. Obviously, there are many stimuli for a bullish insider to cut shares of his or her company, but only one, very clear reason why they would buy. Many academic studies have demonstrated the impressive potential of this method if you know what to do (learn more here).

Thus, let’s analyze the recent info about Medley Capital Corp (NYSE:MCC).

Hedge fund activity in Medley Capital Corp (NYSE:MCC)

In preparation for the third quarter, a total of 4 of the hedge funds we track were long in this stock, a change of -50% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings considerably.

According to our 13F database, PEAK6 Capital Management, managed by Matthew Hulsizer, holds the most valuable position in Medley Capital Corp (NYSE:MCC). PEAK6 Capital Management has a $0.8 million call position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which held a $0.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Israel Englander’s Millennium Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Because Medley Capital Corp (NYSE:MCC) has experienced dropping sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedge funds who sold off their entire stakes in Q1. At the top of the heap, Robert B. Gillam’s McKinley Capital Management dropped the largest investment of the 450+ funds we track, totaling about $6.4 million in stock. Charles Clough’s fund, Clough Capital Partners, also dumped its stock, about $2.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds in Q1.

What have insiders been doing with Medley Capital Corp (NYSE:MCC)?

Legal insider trading, particularly when it’s bullish, is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the last half-year time frame, Medley Capital Corp (NYSE:MCC) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Medley Capital Corp (NYSE:MCC). These stocks are Ladenburg Thalmann Financial Services (NYSEAMEX:LTS), Cowen Group, Inc. (NASDAQ:COWN), Piper Jaffray Companies (NYSE:PJC), GFI Group Inc. (NYSE:GFIG), and FXCM Inc (NYSE:FXCM). This group of stocks are in the investment brokerage – national industry and their market caps match MCC’s market cap.

Using the returns explained by the previously mentioned strategies, average investors should always keep one eye on hedge fund and insider trading activity, and Medley Capital Corp (NYSE:MCC) is an important part of this process.

Discover how hedge fund piggybacking can benefit you