You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Is Pennantpark Floating Rate Capital Ltd (NASDAQ:PFLT) a splendid investment now? The best stock pickers are really becoming hopeful. The number of bullish hedge fund investments went up by 1 recently. PFLT was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. There were 5 hedge funds in our database with PFLT positions at the end of the previous quarter. At the end of this article we will also compare PFLT to other stocks including Pier 1 Imports, Inc. (NYSE:PIR), Computer Programs & Systems, Inc. (NASDAQ:CPSI), and Heritage Commerce Corp. (NASDAQ:HTBK) to get a better sense of its popularity.
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Now, let’s take a look at the latest action surrounding Pennantpark Floating Rate Capital Ltd (NASDAQ:PFLT).
What does the smart money think about Pennantpark Floating Rate Capital Ltd (NASDAQ:PFLT)?
Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in PFLT over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Polar Capital, led by Brian Ashford-Russell and Tim Woolley, holds the most valuable position in Pennantpark Floating Rate Capital Ltd (NASDAQ:PFLT). Polar Capital has a $6.3 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Robert B. Gillam of McKinley Capital Management, with a $1.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism consist of John Overdeck and David Siegel’s Two Sigma Advisors, D E Shaw, one of the biggest hedge funds in the world, and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Millennium Management, led by Israel Englander, initiated the most outsized position in Pennantpark Floating Rate Capital Ltd (NASDAQ:PFLT). Millennium Management had $0.4 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Pennantpark Floating Rate Capital Ltd (NASDAQ:PFLT) but similarly valued. We will take a look at Pier 1 Imports, Inc. (NYSE:PIR), Computer Programs & Systems, Inc. (NASDAQ:CPSI), Heritage Commerce Corp. (NASDAQ:HTBK), and Trevena Inc (NASDAQ:TRVN). This group of stocks’ market values match PFLT’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $10 million in PFLT’s case. Pier 1 Imports, Inc. (NYSE:PIR) is the most popular stock in this table. On the other hand Computer Programs & Systems, Inc. (NASDAQ:CPSI) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Pennantpark Floating Rate Capital Ltd (NASDAQ:PFLT) is even less popular than CPSI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.