Is MVC Capital, Inc. (NYSE:MVC) a marvelous investment now? The smart money is taking a pessimistic view. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience
In the eyes of most investors, hedge funds are viewed as slow, old investment tools of years past. While there are over 8000 funds trading today, we at Insider Monkey look at the elite of this group, close to 450 funds. Most estimates calculate that this group has its hands on the majority of all hedge funds’ total capital, and by watching their best stock picks, we have identified a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per 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 trumped the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Equally as important, bullish 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 motivations for an executive to drop shares of his or her company, but only one, very clear reason why they would buy. Various empirical studies have demonstrated the market-beating potential of this strategy if investors know what to do (learn more here).
Keeping this in mind, it’s important to take a gander at the key action encompassing MVC Capital, Inc. (NYSE:MVC).
What have hedge funds been doing with MVC Capital, Inc. (NYSE:MVC)?
Heading into 2013, a total of 11 of the hedge funds we track held long positions in this stock, a change of 0% from the third quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings considerably.
According to our comprehensive database, Wynnefield Capital, managed by Nelson Obus, holds the largest position in MVC Capital, Inc. (NYSE:MVC). Wynnefield Capital has a $22 million position in the stock, comprising 7.8% of its 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $14 million position; the fund has 0% of its 13F portfolio invested in the stock. Other peers that are bullish include Roger Keith Long’s Otter Creek Management, Michael Price’s MFP Investors and John Overdeck and David Siegel’s Two Sigma Advisors.
Judging by the fact that MVC Capital, Inc. (NYSE:MVC) has witnessed a declination in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of money managers that decided to sell off their positions entirely heading into 2013. It’s worth mentioning that Whitney Tilson’s T2 Partners sold off the biggest investment of the 450+ funds we watch, totaling close to $0 million in stock., and Zeke Ashton of Centaur Capital Partners was right behind this move, as the fund dumped about $0 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
How have insiders been trading MVC Capital, Inc. (NYSE:MVC)?
Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past half-year. Over the last six-month time frame, MVC Capital, Inc. (NYSE:MVC) has seen 3 unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to MVC Capital, Inc. (NYSE:MVC). These stocks are Gladstone Investment Corporation (NASDAQ:GAIN), North European Oil Royalty (NYSE:NRT), KCAP Financial Inc (NASDAQ:KCAP), INTL Fcstone Inc (NASDAQ:INTL), and Mesabi Trust (NYSE:MSB). All of these stocks are in the diversified investments industry and their market caps resemble MVC’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Gladstone Investment Corporation (NASDAQ:GAIN)||4||0||0|
|North European Oil Royalty (NYSE:NRT)||2||1||0|
|KCAP Financial Inc (NASDAQ:KCAP)||2||0||0|
|INTL Fcstone Inc (NASDAQ:INTL)||3||0||3|
|Mesabi Trust (NYSE:MSB)||6||0||0|
With the returns demonstrated by the aforementioned strategies, everyday investors must always keep an eye on hedge fund and insider trading activity, and MVC Capital, Inc. (NYSE:MVC) is an important part of this process.