At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
Main Street Capital Corporation (NYSE:MAIN) investors should be aware of an increase in hedge fund interest recently. Our calculations also showed that main isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a gander at the new hedge fund action encompassing Main Street Capital Corporation (NYSE:MAIN).
How have hedgies been trading Main Street Capital Corporation (NYSE:MAIN)?
Heading into the first quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MAIN over the last 14 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, McKinley Capital Management held the most valuable stake in Main Street Capital Corporation (NYSE:MAIN), which was worth $5.5 million at the end of the third quarter. On the second spot was Millennium Management which amassed $2.3 million worth of shares. Moreover, PEAK6 Capital Management, Citadel Investment Group, and Point72 Asset Management were also bullish on Main Street Capital Corporation (NYSE:MAIN), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, initiated the biggest position in Main Street Capital Corporation (NYSE:MAIN). Citadel Investment Group had $1 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $0.8 million position during the quarter. The other funds with brand new MAIN positions are Michael Gelband’s ExodusPoint Capital and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s also examine hedge fund activity in other stocks similar to Main Street Capital Corporation (NYSE:MAIN). We will take a look at WNS (Holdings) Limited (NYSE:WNS), Cal-Maine Foods Inc (NASDAQ:CALM), Sally Beauty Holdings, Inc. (NYSE:SBH), and Inter Parfums, Inc. (NASDAQ:IPAR). All of these stocks’ market caps match MAIN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WNS | 16 | 141601 | 2 |
| CALM | 18 | 163244 | -3 |
| SBH | 22 | 168014 | 4 |
| IPAR | 11 | 70708 | -2 |
| Average | 16.75 | 135892 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $136 million. That figure was $12 million in MAIN’s case. Sally Beauty Holdings, Inc. (NYSE:SBH) is the most popular stock in this table. On the other hand Inter Parfums, Inc. (NASDAQ:IPAR) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Main Street Capital Corporation (NYSE:MAIN) is even less popular than IPAR. Hedge funds dodged a bullet by taking a bearish stance towards MAIN. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately MAIN wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); MAIN investors were disappointed as the stock returned 15.8% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
