American Capital Ltd. (NASDAQ:ACAS) isn't like the rest of the its more MBS-focused peers in the REIT space. It has actually returned over 7% in 2013, and there's more of a reason to be bullish: hedge funds are supporting it.
At the moment, there are a multitude of methods investors can use to monitor publicly traded companies. Two of the most useful are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite fund managers can beat the S&P 500 by a solid margin (see just how much).
Just as useful, optimistic insider trading sentiment is another way to analyze the world of equities. As the old adage goes: there are a variety of incentives for a bullish insider to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Various academic studies have demonstrated the market-beating potential of this method if you understand where to look (learn more here).
Keeping this in mind, let's examine the recent info for American Capital Ltd. (NASDAQ:ACAS).
At the end of the second quarter, a total of 25 of the hedge funds we track held long positions in this stock, a change of 4% from the previous quarter. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes significantly.
When using filings from the hedgies we track, Pine River Capital Management, managed by Brian Taylor, holds the largest position in American Capital Ltd. (NASDAQ:ACAS). Pine River Capital Management has a $95.8 million position in the stock, comprising 1.5% of its 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $85.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other peers that are bullish include Tom Wagner and Ara Cohen's Knighthead Capital, John Paulson's Paulson & Co and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
As industrywide interest increased, specific money managers were leading the bulls' herd. Pine River Capital Management, managed by Brian Taylor, established the most outsized position in American Capital Ltd. (NASDAQ:ACAS). Pine River Capital Management had 95.8 million invested in the company at the end of the quarter. Cliff Asness's AQR Capital Management also made a $85.9 million investment in the stock during the quarter. The other funds with brand new ACAS positions are Tom Wagner and Ara Cohen's Knighthead Capital, John Paulson's Paulson & Co, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Bullish insider trading is most useful when the primary stock in question has seen transactions within the past six months. Over the latest half-year time frame, American Capital Ltd. (NASDAQ:ACAS) has experienced zero unique insiders buying, and 9 insider sales (see the details of insider trades here).
We'll check out the relationship between both of these indicators in other stocks similar to American Capital Ltd. (NASDAQ:ACAS). These stocks are SEI Investments Company (NASDAQ:SEIC), KKR & Co. L.P. (NYSE:KKR), Och-Ziff Capital Management Group LLC (NYSE:OZM), Legg Mason, Inc. (NYSE:LM), and Lazard Ltd (NYSE:LAZ). All of these stocks are in the asset management industry and their market caps are similar to ACAS's market cap.