Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Gladstone Investment Corporation (NASDAQ:GAIN) changed recently.
Is Gladstone Investment Corporation (NASDAQ:GAIN) worth your attention right now? Prominent investors were in a bearish mood. The number of bullish hedge fund positions retreated by 1 lately. Gladstone Investment Corporation (NASDAQ:GAIN) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 9. Our calculations also showed that GAIN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. Keeping this in mind let’s analyze the fresh hedge fund action encompassing Gladstone Investment Corporation (NASDAQ:GAIN).
Do Hedge Funds Think GAIN Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GAIN over the last 23 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Two Sigma Advisors, managed by John Overdeck and David Siegel, holds the most valuable position in Gladstone Investment Corporation (NASDAQ:GAIN). Two Sigma Advisors has a $0.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Two Sigma Advisors’s heels is D E Shaw, managed by D. E. Shaw, which holds a $0.6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers that are bullish include Ken Griffin’s Citadel Investment Group, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors and . In terms of the portfolio weights assigned to each position Two Sigma Advisors allocated the biggest weight to Gladstone Investment Corporation (NASDAQ:GAIN), around 0.0023% of its 13F portfolio. Schonfeld Strategic Advisors is also relatively very bullish on the stock, dishing out 0.0022 percent of its 13F equity portfolio to GAIN.
Seeing as Gladstone Investment Corporation (NASDAQ:GAIN) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedge funds who sold off their positions entirely heading into Q2. At the top of the heap, Michael Gelband’s ExodusPoint Capital dropped the largest position of the 750 funds monitored by Insider Monkey, valued at close to $0.4 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund dropped about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q2.
Let’s also examine hedge fund activity in other stocks similar to Gladstone Investment Corporation (NASDAQ:GAIN). We will take a look at IBEX Limited (NASDAQ:IBEX), Autolus Therapeutics plc (NASDAQ:AUTL), Kirkland’s, Inc. (NASDAQ:KIRK), Eros STX Global Corporation (NYSE:ESGC), Athenex, Inc. (NASDAQ:ATNX), HOOKIPA Pharma Inc. (NASDAQ:HOOK), and Emerald Holding, Inc. (NYSE:EEX). All of these stocks’ market caps are closest to GAIN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IBEX | 3 | 22990 | -1 |
| AUTL | 13 | 45104 | 5 |
| KIRK | 21 | 140912 | 3 |
| ESGC | 14 | 50781 | 7 |
| ATNX | 11 | 74710 | -9 |
| HOOK | 9 | 70912 | -2 |
| EEX | 6 | 3260 | -1 |
| Average | 11 | 58381 | 0.3 |
View table here if you experience formatting issues.
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 $58 million. That figure was $2 million in GAIN’s case. Kirkland’s, Inc. (NASDAQ:KIRK) is the most popular stock in this table. On the other hand IBEX Limited (NASDAQ:IBEX) is the least popular one with only 3 bullish hedge fund positions. Gladstone Investment Corporation (NASDAQ:GAIN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GAIN is 20.1. 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. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on GAIN as the stock returned 22.6% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
