Is Solar Capital Ltd. (NASDAQ:SLRC) an outstanding investment now? The smart money is turning less bullish. The number of long hedge fund bets dropped by 4 in recent months.
According to most stock holders, hedge funds are perceived as slow, old financial tools of years past. While there are more than 8000 funds in operation at present, we at Insider Monkey look at the aristocrats of this club, around 450 funds. It is widely believed that this group controls the lion’s share of all hedge funds’ total asset base, and by keeping an eye on their best stock picks, we have figured out a number of investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Just as integral, optimistic insider trading sentiment is a second way to parse down the stock market universe. As the old adage goes: there are many stimuli for a corporate insider to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the useful potential of this tactic if piggybackers know where to look (learn more here).
With all of this in mind, we’re going to take a glance at the recent action encompassing Solar Capital Ltd. (NASDAQ:SLRC).
What does the smart money think about Solar Capital Ltd. (NASDAQ:SLRC)?
In preparation for this year, a total of 7 of the hedge funds we track were long in this stock, a change of -36% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes substantially.
Of the funds we track, Charles Clough’s Clough Capital Partners had the largest position in Solar Capital Ltd. (NASDAQ:SLRC), worth close to $36.4 million, accounting for 1.2% of its total 13F portfolio. On Clough Capital Partners’s heels is AQR Capital Management, managed by Cliff Asness, which held a $6.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s Two Sigma Advisors and Robert B. Gillam’s McKinley Capital Management.
Due to the fact that Solar Capital Ltd. (NASDAQ:SLRC) has experienced falling interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedgies who sold off their positions entirely in Q4. At the top of the heap, Brian Jackelow’s SAB Capital Management cut the largest stake of the “upper crust” of funds we watch, valued at an estimated $41.9 million in stock., and D. E. Shaw of D E Shaw was right behind this move, as the fund said goodbye to about $1.5 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 4 funds in Q4.
How are insiders trading Solar Capital Ltd. (NASDAQ:SLRC)?
Insider purchases made by high-level executives is best served when the company in question has seen transactions within the past 180 days. Over the last 180-day time frame, Solar Capital Ltd. (NASDAQ:SLRC) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Solar Capital Ltd. (NASDAQ:SLRC). These stocks are Sabine Royalty Trust (NYSE:SBR), Dorchester Minerals LP (NASDAQ:DMLP), ViewPoint Financial Group (NASDAQ:VPFG), Tile Shop Hldgs, Inc. (NASDAQ:TTS), and Main Street Capital Corporation (NYSE:MAIN). This group of stocks are in the diversified investments industry and their market caps match SLRC’s market cap.