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Hedge Funds Souring On Oxford Square Capital Corp. (OXSQ)

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Oxford Square Capital Corp. (NASDAQ:OXSQ).

Oxford Square Capital Corp. (NASDAQ:OXSQ) investors should be aware of a decrease in support from the world’s most elite money managers recently. Our calculations also showed that OXSQ isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Today there are tons of tools market participants use to appraise their holdings. Some of the less utilized tools are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outperform the market by a healthy margin (see the details here).

Bruce Kovner, Caxton Associates LP

Bruce Kovner of Caxton Associates LP

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to go over the recent hedge fund action regarding Oxford Square Capital Corp. (NASDAQ:OXSQ).

What have hedge funds been doing with Oxford Square Capital Corp. (NASDAQ:OXSQ)?

At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the fourth quarter of 2019. On the other hand, there were a total of 6 hedge funds with a bullish position in OXSQ a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is OXSQ A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the biggest position in Oxford Square Capital Corp. (NASDAQ:OXSQ). Arrowstreet Capital has a $1.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $0.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions comprise Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Michael Gelband’s ExodusPoint Capital. In terms of the portfolio weights assigned to each position Arrowstreet Capital allocated the biggest weight to Oxford Square Capital Corp. (NASDAQ:OXSQ), around 0.0043% of its 13F portfolio. ExodusPoint Capital is also relatively very bullish on the stock, designating 0.003 percent of its 13F equity portfolio to OXSQ.

Due to the fact that Oxford Square Capital Corp. (NASDAQ:OXSQ) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedgies that elected to cut their full holdings last quarter. At the top of the heap, Bernard Selz’s Selz Capital sold off the biggest investment of all the hedgies followed by Insider Monkey, valued at about $0.8 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund cut about $0.6 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Oxford Square Capital Corp. (NASDAQ:OXSQ). We will take a look at EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT), Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS), Lakeland Industries, Inc. (NASDAQ:LAKE), and Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK). This group of stocks’ market values are similar to OXSQ’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EYPT 3 812 1
PIRS 19 47612 -2
LAKE 9 18007 5
PEBK 2 5139 0
Average 8.25 17893 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $2 million in OXSQ’s case. Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) is the most popular stock in this table. On the other hand Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) is the least popular one with only 2 bullish hedge fund positions. Oxford Square Capital Corp. (NASDAQ:OXSQ) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on OXSQ as the stock returned 41% during the second quarter and outperformed the market by an even larger margin.

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