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Is Main Street Capital Corporation (MAIN) Going To Burn These Hedge Funds?

As industrywide interest jumped, key money managers have jumped into Main Street Capital Corporation (NYSE:MAIN) headfirst. Two Sigma Advisors, led by John Overdeck and David Siegel, assembled the largest position in Main Street Capital Corporation (NYSE:MAIN). Two Sigma Advisors had $3.7 million invested in the company at the end of the quarter, one of the biggest hedge funds in the world, D E Shaw also made a $1 million investment in the stock during the quarter. The other funds with brand new MAIN positions are Matthew Hulsizer’s PEAK6 Capital Management and Ken Griffin’s Citadel Investment Group.

Let’s also examine hedge fund activity in other stocks similar to Main Street Capital Corporation (NYSE:MAIN). These stocks are GATX Corporation (NYSE:GATX), 2U Inc (NASDAQ:TWOU), NovaGold Resources Inc. (USA) (NYSEAMEX:NG), and The Geo Group, Inc. (NYSE:GEO). 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
GATX 11 174818 -1
TWOU 15 70739 3
NG 22 299962 2
GEO 14 152825 1

As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $15 million in MAIN’s case. NovaGold Resources Inc. (USA) (NYSEAMEX:NG) is the most popular stock in this table. On the other hand GATX Corporation (NYSE:GATX) 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 GATX. 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.

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