Is NewStar Financial Inc (NEWS) Going to Burn These Hedge Funds?

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, established the biggest position in NewStar Financial Inc (NASDAQ:NEWS), worth an estimated $0.2 million at the end of the quarter.

Let’s check out hedge fund activity in other stocks similar to NewStar Financial Inc (NASDAQ:NEWS). These stocks are Resource Capital Corp. (NYSE:RSO), Univest Corp. of PA (NASDAQ:UVSP), Cliffs Natural Resources Inc (NYSE:CLF), and A10 Networks Inc (NYSE:ATEN). All of these stocks’ market caps are similar to NEWS’s market cap.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was a whooping $109 million in NEWS’s case. Cliffs Natural Resources Inc (NYSE:CLF) is the most popular stock in this table. On the other hand Univest Corp. of PA (NASDAQ:UVSP) is the least popular one with only 5 bullish hedge fund positions. NewStar Financial Inc (NASDAQ:NEWS) 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 CLF might be a better candidate to consider a long position.