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 Fidus Investment Corp (NASDAQ:FDUS).
Fidus Investment Corp (NASDAQ:FDUS) was in 5 hedge funds’ portfolios at the end of September. The all time high for this statistics is 8. FDUS has seen an increase in enthusiasm from smart money lately. There were 4 hedge funds in our database with FDUS holdings at the end of June. Our calculations also showed that FDUS isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
To most stock holders, hedge funds are assumed to be underperforming, old investment tools of the past. While there are more than 8000 funds in operation today, Our researchers look at the leaders of this club, around 850 funds. These investment experts shepherd the lion’s share of the smart money’s total capital, and by tracking their finest equity investments, Insider Monkey has brought to light various investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we’re going to view the latest hedge fund action surrounding Fidus Investment Corp (NASDAQ:FDUS).
How have hedgies been trading Fidus Investment Corp (NASDAQ:FDUS)?
At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 4 hedge funds with a bullish position in FDUS a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Among these funds, Arrowstreet Capital held the most valuable stake in Fidus Investment Corp (NASDAQ:FDUS), which was worth $3.1 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $1.9 million worth of shares. Millennium Management, D E Shaw, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Two Sigma Advisors allocated the biggest weight to Fidus Investment Corp (NASDAQ:FDUS), around 0.01% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, earmarking 0.0049 percent of its 13F equity portfolio to FDUS.
Consequently, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the most valuable position in Fidus Investment Corp (NASDAQ:FDUS). Millennium Management had $0.7 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.2 million position during the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Fidus Investment Corp (NASDAQ:FDUS) but similarly valued. We will take a look at ProQR Therapeutics NV (NASDAQ:PRQR), The Marcus Corporation (NYSE:MCS), Greenlight Capital Re, Ltd. (NASDAQ:GLRE), Preformed Line Products Company (NASDAQ:PLPC), Sierra Metals Inc. (NYSE:SMTS), Gold Resource Corporation (NYSE:GORO), and American Renal Associates Holdings, Inc (NYSE:ARA). All of these stocks’ market caps resemble FDUS’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.6 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $6 million in FDUS’s case. The Marcus Corporation (NYSE:MCS) is the most popular stock in this table. On the other hand Sierra Metals Inc. (NYSE:SMTS) is the least popular one with only 3 bullish hedge fund positions. Fidus Investment Corp (NASDAQ:FDUS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FDUS is 34.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on FDUS as the stock returned 44.5% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.