Ares Capital Corporation (NASDAQ:ARCC) investors should pay attention to an increase in hedge fund interest in recent months.
According to most market participants, hedge funds are perceived as unimportant, outdated financial tools of years past. While there are more than 8000 funds with their doors open at the moment, we at Insider Monkey hone in on the leaders of this club, around 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total capital, and by paying attention to their highest performing stock picks, we have found a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Equally as integral, optimistic insider trading sentiment is a second way to parse down the stock market universe. As the old adage goes: there are a number of motivations for an insider to sell shares of his or her company, but just one, very obvious reason why they would buy. Several academic studies have demonstrated the valuable potential of this tactic if “monkeys” know where to look (learn more here).
With these “truths” under our belt, it’s important to take a gander at the key action surrounding Ares Capital Corporation (NASDAQ:ARCC).
Hedge fund activity in Ares Capital Corporation (NASDAQ:ARCC)
Heading into 2013, a total of 14 of the hedge funds we track held long positions in this stock, a change of 8% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes significantly.
Of the funds we track, Clough Capital Partners, managed by Charles Clough, holds the most valuable position in Ares Capital Corporation (NASDAQ:ARCC). Clough Capital Partners has a $37.6 million position in the stock, comprising 1.2% of its 13F portfolio. On Clough Capital Partners’s heels is John Overdeck and David Siegel of Two Sigma Advisors, with a $21.5 million position; 0.6% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Ken Griffin’s Citadel Investment Group, Amy Minella’s Cardinal Capital and D. E. Shaw’s D E Shaw.
Consequently, some big names have jumped into Ares Capital Corporation (NASDAQ:ARCC) headfirst. Clovis Capital Management, managed by Scott Scher & Michael Prober, assembled the most outsized position in Ares Capital Corporation (NASDAQ:ARCC). Clovis Capital Management had 1.3 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also made a $0.6 million investment in the stock during the quarter.
What do corporate executives and insiders think about Ares Capital Corporation (NASDAQ:ARCC)?
Insider purchases made by high-level executives is best served when the company in focus has experienced transactions within the past six months. Over the last 180-day time period, Ares Capital Corporation (NASDAQ:ARCC) has seen 1 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Ares Capital Corporation (NASDAQ:ARCC). These stocks are NYSE Euronext (NYSE:NYX), A.F.P Provida SA (ADR) (NYSE:PVD), Apollo Global Management LLC (NYSE:APO), CBOE Holdings, Inc (NASDAQ:CBOE), and NASDAQ OMX Group, Inc. (NASDAQ:NDAQ). This group of stocks are the members of the diversified investments industry and their market caps are similar to ARCC’s market cap.