What Do Hedge Funds Think of Monroe Capital Corp (MRCC)?

The Insider Monkey team has completed processing the quarterly 13F filings for the September 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 Monroe Capital Corp (NASDAQ:MRCC).

Is Monroe Capital Corp (NASDAQ:MRCC) a splendid investment right now? Hedge funds are becoming hopeful. The number of long hedge fund bets inched up by 3 in recent months. At the end of this article we will also compare MRCC to other stocks including Aspen Aerogels Inc (NYSE:ASPN), Maxwell Technologies Inc. (NASDAQ:MXWL), and HORSEHEAD HOLDING CORP. (NASDAQ:ZINC) to get a better sense of its popularity.

In the financial world there are many metrics market participants can use to grade stocks. Two of the most useful metrics are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top investment managers can beat the market by a significant margin (see the details here).

Keeping this in mind, let’s go over the key action encompassing Monroe Capital Corp (NASDAQ:MRCC).

Hedge fund activity in Monroe Capital Corp (NASDAQ:MRCC)

Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 300% from the second quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates has the most valuable position in Monroe Capital Corp (NASDAQ:MRCC), worth close to $0.8 million, amounting to less than 0.1% of its total 13F portfolio. The second largest stake is held by McKinley Capital Management, led by Robert B. Gillam, holding a $0.5 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism encompass Israel Englander’s Millennium Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

Now, key money managers were leading the bulls’ herd. McKinley Capital Management, managed by Robert B. Gillam, initiated the most valuable position in Monroe Capital Corp (NASDAQ:MRCC). McKinley Capital Management had $0.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.4 million investment in the stock during the quarter. The only other fund with a brand new MRCC position is John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s check out hedge fund activity in other stocks similar to Monroe Capital Corp (NASDAQ:MRCC). We will take a look at Aspen Aerogels Inc (NYSE:ASPN), Maxwell Technologies Inc. (NASDAQ:MXWL), HORSEHEAD HOLDING CORP. (NASDAQ:ZINC), and Hurco Companies, Inc. (NASDAQ:HURC). All of these stocks’ market caps match MRCC’s market cap.

As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $2 million in MRCC’s case. HORSEHEAD HOLDING CORP. (NASDAQ:ZINC) is the most popular stock in this table. On the other hand Aspen Aerogels Inc (NYSE:ASPN) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Monroe Capital Corp (NASDAQ:MRCC) is as less popular as ASPN. 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.