American Capital Ltd. (NASDAQ:ACAS) was in 24 hedge funds’ portfolio at the end of the first quarter of 2013. ACAS investors should pay attention to an increase in activity from the world’s largest hedge funds of late. There were 23 hedge funds in our database with ACAS positions at the end of the previous quarter.
In today’s marketplace, there are many indicators investors can use to monitor Mr. Market. Two of the most underrated are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top fund managers can beat the S&P 500 by a superb amount (see just how much).
Just as important, optimistic insider trading activity is another way to break down the financial markets. Just as you’d expect, there are plenty of incentives for a bullish insider to downsize shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this tactic if piggybackers know what to do (learn more here).
With these “truths” under our belt, it’s important to take a gander at the latest action encompassing American Capital Ltd. (NASDAQ:ACAS).
What does the smart money think about American Capital Ltd. (NASDAQ:ACAS)?
At the end of the first quarter, a total of 24 of the hedge funds we track were long in this stock, a change of 4% from the first quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably.
Of the funds we track, Brian Taylor’s Pine River Capital Management had the largest position in American Capital Ltd. (NASDAQ:ACAS), worth close to $120.4 million, comprising 2.4% of its total 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which held a $101.7 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Tom Wagner and Ara Cohen’s Knighthead Capital and John Paulson’s Paulson & Co.
As industrywide interest jumped, key money managers were breaking ground themselves. Knighthead Capital, managed by Tom Wagner and Ara Cohen, established the most valuable position in American Capital Ltd. (NASDAQ:ACAS). Knighthead Capital had 58.9 million invested in the company at the end of the quarter. Amy Minella’s Cardinal Capital also made a $11.8 million investment in the stock during the quarter. The following funds were also among the new ACAS investors: SAC Subsidiary’s Sigma Capital Management, Wojciech Uzdelewicz’s Espalier Global Management, and Geoffrey Raynor’s Q Investments (Specter Holdings).
Insider trading activity in American Capital Ltd. (NASDAQ:ACAS)
Insider trading activity, especially when it’s bullish, is particularly usable when the company we’re looking at has experienced transactions within the past 180 days. Over the last six-month time frame, American Capital Ltd. (NASDAQ:ACAS) has experienced zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to American Capital Ltd. (NASDAQ:ACAS). These stocks are SEI Investments Company (NASDAQ:SEIC), KKR & Co. L.P. (NYSE:KKR), Och-Ziff Capital Management Group LLC (NYSE:OZM), Legg Mason, Inc. (NYSE:LM), and Lazard Ltd (NYSE:LAZ). This group of stocks are in the asset management industry and their market caps are similar to ACAS’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|SEI Investments Company (NASDAQ:SEIC)||22||1||6|
|KKR & Co. L.P. (NYSE:KKR)||23||0||2|
|Och-Ziff Capital Management Group LLC (NYSE:OZM)||13||0||1|
|Legg Mason, Inc. (NYSE:LM)||18||0||1|
|Lazard Ltd (NYSE:LAZ)||19||0||3|
With the returns demonstrated by the aforementioned studies, everyday investors should always monitor hedge fund and insider trading activity, and American Capital Ltd. (NASDAQ:ACAS) is an important part of this process.