Nuveen Credit Strategies Income Fund (JQC) Hedge Funds Are Snapping Up

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Nuveen Credit Strategies Income Fund (NYSE:JQC), and what that likely means for the prospects of the company and its stock.

Nuveen Credit Strategies Income Fund (NYSE:JQC) investors should be aware of an increase in support from the world’s most successful money managers lately. There were 6 hedge funds in our database with JQC positions at the end of the previous quarter. At the end of this article we will also compare JQC to other stocks including AK Steel Holding Corporation (NYSE:AKS), Ferro Corporation (NYSE:FOE), and Summit Hotel Properties Inc (NYSE:INN) to get a better sense of its popularity.

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Keeping this in mind, we’re going to go over the new action encompassing Nuveen Credit Strategies Income Fund (NYSE:JQC).

Hedge fund activity in Nuveen Credit Strategies Income Fund (NYSE:JQC)

Heading into the fourth quarter of 2016, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a jump of 17% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards JQC over the last 5 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

JQC Chart

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, William Michaelcheck’s Mariner Investment Group has the biggest position in Nuveen Credit Strategies Income Fund (NYSE:JQC), worth close to $7.1 million, corresponding to 3.7% of its total 13F portfolio. On Mariner Investment Group’s heels is Ionic Capital Management, led by Bart Baum, which holds a $2.1 million position; 0.1% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism consist of Jim Roumell’s Roumell Asset Management, Boaz Weinstein’s Saba Capital and Mark Coe’s Coe Capital Management. We should note that Saba Capital is 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.

Now, key hedge funds were breaking ground themselves. Millennium Management, one of the 10 largest hedge funds in the world, assembled the most valuable position in Nuveen Credit Strategies Income Fund (NYSE:JQC). Millennium Management had $0.3 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Nuveen Credit Strategies Income Fund (NYSE:JQC). We will take a look at AK Steel Holding Corporation (NYSE:AKS), Ferro Corporation (NYSE:FOE), Summit Hotel Properties Inc (NYSE:INN), and TTM Technologies, Inc. (NASDAQ:TTMI). This group of stocks’ market valuations are closest to JQC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AKS 33 219749 1
FOE 23 238284 -5
INN 9 27009 3
TTMI 20 85704 5

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $143 million. That figure was $12 million in JQC’s case. AK Steel Holding Corporation (NYSE:AKS) is the most popular stock in this table. On the other hand Summit Hotel Properties Inc (NYSE:INN) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Nuveen Credit Strategies Income Fund (NYSE:JQC) is even less popular than INN. 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.

Disclosure: None