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Apollo Investment Corp. (AINV): Are Hedge Funds Right About This Stock?

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Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Apollo Investment Corp. (NASDAQ:AINV) investors should pay attention to an increase in support from the world’s most successful money managers recently. There were 11 hedge funds in our database with AINV holdings at the end of September, up by 3 quarter-over-quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as WestAmerica Bancorp. (NASDAQ:WABC), Huron Consulting Group (NASDAQ:HURN), and MaxLinear, Inc. (NYSE:MXL) to gather more data points.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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How are hedge funds trading Apollo Investment Corp. (NASDAQ:AINV)?

At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a 38% boost from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AINV over the last 5 quarters, which was kicked off by a huge drop in Q4 2015. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

AINV Chart

According to Insider Monkey’s hedge fund database, D E Shaw, one of the biggest hedge funds in the world, holds the most valuable position in Apollo Investment Corp. (NASDAQ:AINV). D E Shaw has a $3.4 million position in the stock. Coming in second is Robert Raiff of Raiff Partners, with a $1.8 million position; 2.3% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish contain Robert B. Gillam’s McKinley Capital Management, Thomas G. Maheras’ Tegean Capital Management, and Joshua Packwood and Schuster Tanger’s Radix Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

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