Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of GSV Capital Corp (NASDAQ:GSVC) and see how the stock is affected by the recent hedge fund activity.
Is GSV Capital Corp (NASDAQ:GSVC) a sound investment today? The smart money is in a bearish mood. The number of long hedge fund positions dropped by 1 recently. What is even more interesting is that the hedge funds followed the trajectory of GSV Capital Corp’s stock, which dropped 23.86% during the third quarter. Considering the lower outlook, we are up to the task to find out more about the hedge funds holding positions in GSV Capital Corp (NASDAQ:GSVC).
For an overall market understanding, we will also compare GSV Capital Corp (NASDAQ:GSVC) to other stocks including Five Star Quality Care, Inc. (NYSE:FVE), Exa Corp (NASDAQ:EXA), and ASA Gold and Precious Metals Ltd (NYSE:ASA) to get a better sense of its popularity.
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According to most stock holders, hedge funds are viewed as worthless, old financial tools of yesteryear. While there are more than 8000 funds with their doors open at the moment, Our experts choose to focus on the moguls of this group, around 700 funds. These hedge fund managers control most of all hedge funds’ total capital, and by watching their matchless picks, Insider Monkey has found several investment strategies that have historically outpaced Mr. Market. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, we’re going to analyze the fresh action surrounding GSV Capital Corp (NASDAQ:GSVC).
How are hedge funds trading GSV Capital Corp (NASDAQ:GSVC)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 14% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jacob Doft’s Highline Capital Management has the biggest position in GSV Capital Corp (NASDAQ:GSVC), worth close to $1.3 million, amounting to 0.1% of its total 13F portfolio. The second most bullish fund manager is Robert B. Gillam of McKinley Capital Management, with a $0.9 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism contain Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, Peter Muller’s PDT Partners, and Matthew Hulsizer’s PEAK6 Capital Management.
Due to the fact that GSV Capital Corp (NASDAQ:GSVC) has faced a declining sentiment from the smart money, logic holds that there exists a select few funds that elected to cut their entire stakes in the third quarter. Interestingly, D E Shaw cut the largest investment of all the hedgies tracked by Insider Monkey, comprising an estimated $0.2 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dumped its stock, about $0.2 million worth of shares. These moves are important to note, as aggregate hedge fund interest was cut by 1 fund in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as GSV Capital Corp (NASDAQ:GSVC) but similarly valued. These stocks are Five Star Quality Care, Inc. (NYSE:FVE), Exa Corp (NASDAQ:EXA), ASA Gold and Precious Metals Ltd (NYSE:ASA), and Gaiam, Inc. (NASDAQ:GAIA). This group of stocks’ market caps match GSV Capital Corp (NASDAQ:GSVC)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FVE | 12 | 27419 | 0 |
| EXA | 7 | 20431 | -1 |
| ASA | 4 | 19794 | 1 |
| GAIA | 8 | 35837 | -1 |
As you can see, these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $26 million. That figure was $3 million in GSV Capital Corp (NASDAQ:GSVC)’s case. Five Star Quality Care, Inc. (NYSE:FVE) is the most popular stock in this table. On the other hand, ASA Gold and Precious Metals Ltd (NYSE:ASA) is the least popular one with only 4 bullish hedge fund positions. GSV Capital Corp (NASDAQ:GSVC) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Five Star Quality Care, Inc. (NYSE:FVE) might be a better candidate to consider a long position.
