Is Nuveen Floating Rate Income Fund (JFR) A Good Stock To Buy?

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make a proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Hedge fund interest in Nuveen Floating Rate Income Fund (NYSE:JFR) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article, we will also compare Nuveen Floating Rate Income Fund (NYSE:JFR) to other stocks, including Boulder Brands Inc (NASDAQ:BDBD), Enterprise Financial Services Corp (NASDAQ:EFSC), and Cowen Group, Inc. (NASDAQ:COWN) to get a better sense of its popularity.

In the eyes of most stock holders, hedge funds are assumed to be slow, old financial vehicles of years past. While there are over an 8000 funds trading today, we choose to focus on the upper echelon of this club, around 700 funds. These investment experts direct the lion’s share of the smart money’s total capital, and by keeping track of their inimitable equity investments, Insider Monkey has formulated a few investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, let’s take a peek at the fresh action regarding Nuveen Floating Rate Income Fund (NYSE:JFR).

Hedge fund activity in Nuveen Floating Rate Income Fund (NYSE:JFR)

At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, flat over the last quarter. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, William Michaelcheck’s Mariner Investment Group has the most valuable position in Nuveen Floating Rate Income Fund (NYSE:JFR), worth close to $6.1 million, comprising 1.2% of its total 13F portfolio. Coming in second is Murray Stahl of Horizon Asset Management, with a $0.6 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish include Mark Coe’s Coe Capital Management, and Tim Mullen’s Swift Run Capital Management.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Nuveen Floating Rate Income Fund (NYSE:JFR) but similarly valued. These stocks are Boulder Brands Inc (NASDAQ:BDBD), Enterprise Financial Services Corp (NASDAQ:EFSC), Cowen Group, Inc. (NASDAQ:COWN), and Tower International Inc (NYSE:TOWR). This group of stocks’ market values resembles Nuveen Floating Rate Income Fund (NYSE:JFR)’s market value.

As you can see, these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $7 million in Nuveen Floating Rate Income Fund (NYSE:JFR)’s case. Tower International Inc (NYSE:TOWR) is the most popular stock in this table. On the other hand, Enterprise Financial Services Corp (NASDAQ:EFSC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks, Nuveen Floating Rate Income Fund (NYSE:JFR) is even less popular than Enterprise Financial Services Corp (NASDAQ:EFSC). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.