Is Blackrock Kelso Capital Corp. (NASDAQ:BKCC) an attractive investment now? The best stock pickers are getting more optimistic. The number of bullish hedge fund positions moved up by 2 in recent months.
To most shareholders, hedge funds are seen as underperforming, outdated financial tools of the past. While there are over 8000 funds in operation at the moment, we hone in on the masters of this group, about 450 funds. It is widely believed that this group controls the majority of all hedge funds’ total capital, and by watching their best equity investments, we have found a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as important, optimistic insider trading activity is a second way to parse down the investments you’re interested in. Just as you’d expect, there are lots of stimuli for an upper level exec to get rid of shares of his or her company, but only one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the impressive potential of this method if investors understand what to do (learn more here).
With all of this in mind, it’s important to take a peek at the key action encompassing Blackrock Kelso Capital Corp. (NASDAQ:BKCC).
Hedge fund activity in Blackrock Kelso Capital Corp. (NASDAQ:BKCC)
At Q1’s end, a total of 9 of the hedge funds we track were long in this stock, a change of 29% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially.
Of the funds we track, AQR Capital Management, managed by Cliff Asness, holds the biggest position in Blackrock Kelso Capital Corp. (NASDAQ:BKCC). AQR Capital Management has a $12.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On AQR Capital Management’s heels is Two Sigma Advisors, managed by John Overdeck and David Siegel, which held a $2.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Matthew Hulsizer’s PEAK6 Capital Management.
Now, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, established the most valuable position in Blackrock Kelso Capital Corp. (NASDAQ:BKCC). Millennium Management had 1.5 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $0.1 million position during the quarter. The only other fund with a new position in the stock is Matthew Hulsizer’s PEAK6 Capital Management.
Insider trading activity in Blackrock Kelso Capital Corp. (NASDAQ:BKCC)
Insider buying is most useful when the company in focus has seen transactions within the past six months. Over the latest half-year time frame, Blackrock Kelso Capital Corp. (NASDAQ:BKCC) has seen zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Blackrock Kelso Capital Corp. (NASDAQ:BKCC). These stocks are Epoch Holding Corp (NASDAQ:EPHC), Encore Capital Group, Inc. (NASDAQ:ECPG), The India Fund, Inc. (NYSE:IFN), Triangle Capital Corporation (NYSE:TCAP), and Pacific Coast Oil Trust (NYSE:ROYT). This group of stocks are in the asset management industry and their market caps are similar to BKCC’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Epoch Holding Corp (NASDAQ:EPHC) | 9 | 0 | 1 |
| Encore Capital Group, Inc. (NASDAQ:ECPG) | 11 | 1 | 2 |
| The India Fund, Inc. (NYSE:IFN) | 4 | 0 | 0 |
| Triangle Capital Corporation (NYSE:TCAP) | 4 | 0 | 0 |
| Pacific Coast Oil Trust (NYSE:ROYT) | 1 | 0 | 0 |
With the returns demonstrated by the aforementioned research, everyday investors should always monitor hedge fund and insider trading activity, and Blackrock Kelso Capital Corp. (NASDAQ:BKCC) is an important part of this process.
