Hedge Fund Ownership In Apollo Investment Corp. (AINV) High, But Holdings Light

Does Apollo Investment Corp. (NASDAQ:AINV) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund sentiment towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and pour millions of dollars into their analysis efforts, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail on occasion, but their stock picks have generated superior risk-adjusted returns on average over the years.

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Is Apollo Investment Corp. (NASDAQ:AINV) the right investment to pursue these days? The best stock pickers are taking a bullish view. The number of long hedge fund positions increased by one in the past quarter. Apollo Investment Corp. (NASDAQ:AINV) was in 17 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with Apollo Investment Corp. (NASDAQ:AINV) positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Axovant Sciences Ltd (NYSE:AXON), Plexus Corp. (NASDAQ:PLXS), and Super Micro Computer, Inc. (NASDAQ:SMCI) to gather more data points.

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If you’d ask most traders, hedge funds are perceived as worthless, old investment vehicles of yesteryear. While there are over 8,000 funds trading at present, experts at hedge fund tracking site Insider Monkey hone in on the upper echelon of this club, about 700 funds. It is estimated that this group of investors control the majority of the smart money’s total asset base, and by monitoring their matchless stock picks, Insider Monkey has determined a number of investment strategies that have historically outrun the broader indices. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points annually for a decade in its backtests.

Keeping this in mind, let’s check out the fresh action regarding Apollo Investment Corp. (NASDAQ:AINV).

What does the smart money think about Apollo Investment Corp. (NASDAQ:AINV)?

At the end of Q3, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 6% from the second quarter. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

When looking at the hedgies followed by Insider Monkey, Michael Thompson’s BHR Capital has the largest position in Apollo Investment Corp. (NASDAQ:AINV), worth close to $7.1 million, accounting for 1% of its total 13F portfolio. The second-largest stake is held by Royce & Associates, mutual fund managed by Chuck Royce, which holds a $6.4 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds that hold long positions comprise Israel Englander’s Millennium Management, Robert B. Gillam’s McKinley Capital Management, and Robert Raiff’s Raiff Partners.

Now, key money managers have been driving this bullishness. Raiff Partners initiated the biggest position in Apollo Investment Corp. (NASDAQ:AINV). Raiff Partners had $1.2 million invested in the company at the end of the quarter. Chao Ku’s Nine Chapters Capital Management also made a $0.5 million investment in the stock during the quarter. The following funds were also among the new Apollo Investment Corp. (NASDAQ:AINV) investors: Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, David Costen Haley’s HBK Investments, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s also examine hedge fund activity in other stocks similar to Apollo Investment Corp. (NASDAQ:AINV). These stocks are Axovant Sciences Ltd (NYSE:AXON), Plexus Corp. (NASDAQ:PLXS), Super Micro Computer, Inc. (NASDAQ:SMCI), and Franklin Electric Co. (NASDAQ:FELE). This group of stocks’ market caps match Apollo Investment Corp. (NASDAQ:AINV)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AXON 15 1148980 -6
PLXS 15 108007 0
SMCI 14 64887 0
FELE 10 89550 -2

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $353 million, far outstripping the $23 million invested in Apollo Investment. Axovant Sciences Ltd (NYSE:AXON) is the most popular stock in this table. On the other hand, Franklin Electric Co. (NASDAQ:FELE) is the least popular one with only ten bullish hedge fund positions. Compared to these stocks Apollo Investment Corp. (NASDAQ:AINV) is more popular among hedge funds in number of funds, but by far the least popular in terms of capital invested in it. As we would rather spend time researching a stock that hedge funds are piling in or pouring their money into, Axovant looks like the most intriguing stock among the five presented.