We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Portman Ridge Finance Corporation (NASDAQ:PTMN) based on that data.
Is PTMN a good stock to buy now? Portman Ridge Finance Corporation (NASDAQ:PTMN) was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 9. PTMN has seen a decrease in enthusiasm from smart money lately. There were 9 hedge funds in our database with PTMN positions at the end of the second quarter. Our calculations also showed that PTMN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Paul Isaac of Arbiter Partners Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to take a glance at the recent hedge fund action surrounding Portman Ridge Finance Corporation (NASDAQ:PTMN).
How are hedge funds trading Portman Ridge Finance Corporation (NASDAQ:PTMN)?
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PTMN over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Callodine Capital Management held the most valuable stake in Portman Ridge Finance Corporation (NASDAQ:PTMN), which was worth $1.5 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $0.5 million worth of shares. Arbiter Partners Capital Management, Millennium Management, and Fondren Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Fondren Management allocated the biggest weight to Portman Ridge Finance Corporation (NASDAQ:PTMN), around 1.41% of its 13F portfolio. Callodine Capital Management is also relatively very bullish on the stock, setting aside 0.8 percent of its 13F equity portfolio to PTMN.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Roumell Asset Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified PTMN as a viable investment and initiated a position in the stock.
Let’s go over hedge fund activity in other stocks similar to Portman Ridge Finance Corporation (NASDAQ:PTMN). We will take a look at Biocept, Inc. (NASDAQ:BIOC), SandRidge Energy Inc. (NYSE:SD), Savara, Inc. (NASDAQ:SVRA), Huttig Building Products, Inc. (NASDAQ:HBP), 180 Degree Capital Corp. (NASDAQ:TURN), Vascular Biogenics Ltd. (NASDAQ:VBLT), and Reed’s, Inc. (NASDAQ:REED). This group of stocks’ market values are similar to PTMN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BIOC | 1 | 48 | -1 |
| SD | 14 | 18753 | 1 |
| SVRA | 9 | 6958 | 0 |
| HBP | 2 | 1683 | -1 |
| TURN | 3 | 5137 | 0 |
| VBLT | 1 | 748 | -1 |
| REED | 5 | 2532 | -1 |
| Average | 5 | 5123 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $3 million in PTMN’s case. SandRidge Energy Inc. (NYSE:SD) is the most popular stock in this table. On the other hand Biocept, Inc. (NASDAQ:BIOC) is the least popular one with only 1 bullish hedge fund positions. Portman Ridge Finance Corporation (NASDAQ:PTMN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PTMN is 57.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on PTMN as the stock returned 26.4% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
