Hedge Funds Are Piling Into Marlin Business Services Corp. (MRLN)

We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article, we look at what those funds think of Marlin Business Services Corp. (NASDAQ:MRLN) based on that data.

Is Marlin Business Services Corp. (NASDAQ:MRLN) ready to rally soon? The smart money was getting more bullish. The number of long hedge fund bets went up by 6 lately. Marlin Business Services Corp. (NASDAQ:MRLN) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 7. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MRLN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to review the new hedge fund action encompassing Marlin Business Services Corp. (NASDAQ:MRLN).

Do Hedge Funds Think MRLN Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 150% from the first quarter of 2020. On the other hand, there were a total of 4 hedge funds with a bullish position in MRLN a year ago. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Matthew Lindenbaum’s Basswood Capital has the biggest position in Marlin Business Services Corp. (NASDAQ:MRLN), worth close to $11.7 million, corresponding to 0.5% of its total 13F portfolio. On Basswood Capital’s heels is Renaissance Technologies, which holds a $6.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism encompass Nathaniel August’s Mangrove Partners, Noam Gottesman’s GLG Partners and Crispin Odey’s Odey Asset Management Group. In terms of the portfolio weights assigned to each position Odey Asset Management Group allocated the biggest weight to Marlin Business Services Corp. (NASDAQ:MRLN), around 0.56% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, dishing out 0.49 percent of its 13F equity portfolio to MRLN.

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Mangrove Partners, managed by Nathaniel August, assembled the most valuable position in Marlin Business Services Corp. (NASDAQ:MRLN). Mangrove Partners had $4.6 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $4.5 million position during the quarter. The other funds with brand new MRLN positions are Crispin Odey’s Odey Asset Management Group, John Overdeck and David Siegel’s Two Sigma Advisors, and Wayne Yu’s BCK Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Marlin Business Services Corp. (NASDAQ:MRLN) but similarly valued. These stocks are Lava Therapeutics B.V. (NASDAQ:LVTX), HOOKIPA Pharma Inc. (NASDAQ:HOOK), Gran Tierra Energy Inc. (NYSE:GTE), Leju Holdings Ltd (NYSE:LEJU), Intrusion Inc. (NASDAQ:INTZ), Immersion Corporation (NASDAQ:IMMR), and Ondas Holdings Inc. (NASDAQ:ONDS). This group of stocks’ market values match MRLN’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $32 million in MRLN’s case. Immersion Corporation (NASDAQ:IMMR) is the most popular stock in this table. On the other hand Leju Holdings Ltd (NYSE:LEJU) is the least popular one with only 2 bullish hedge fund positions. Marlin Business Services Corp. (NASDAQ:MRLN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MRLN is 61.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately MRLN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MRLN were disappointed as the stock returned -1.5% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.