PennantPark Investment Corp. (PNNT): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do?

Page 1 of 2

PennantPark Investment Corp. (NASDAQ:PNNT) was in 9 hedge funds’ portfolio at the end of March. PNNT has experienced a decrease in activity from the world’s largest hedge funds recently. There were 9 hedge funds in our database with PNNT positions at the end of the previous quarter.

In the financial world, there are plenty of methods shareholders can use to watch publicly traded companies. A pair of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite money managers can outperform the broader indices by a significant margin (see just how much).

Equally as integral, bullish insider trading sentiment is another way to parse down the marketplace. Obviously, there are lots of reasons for an insider to get rid of shares of his or her company, but just one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the useful potential of this strategy if you know what to do (learn more here).

With these “truths” under our belt, it’s important to take a glance at the recent action encompassing PennantPark Investment Corp. (NASDAQ:PNNT).

How have hedgies been trading PennantPark Investment Corp. (NASDAQ:PNNT)?

Heading into Q2, a total of 9 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially.

PennantPark Investment Corp. (NASDAQ:PNNT)According to our comprehensive database, Charles Clough’s Clough Capital Partners had the biggest position in PennantPark Investment Corp. (NASDAQ:PNNT), worth close to $7.2 million, accounting for 0.3% of its total 13F portfolio. The second largest stake is held by AQR Capital Management, managed by Cliff Asness, which held a $6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Bruce Silver’s Silver Capital Management LLC, Israel Englander’s Millennium Management and Bill Miller’s Legg Mason Capital Management.

Since PennantPark Investment Corp. (NASDAQ:PNNT) has witnessed falling interest from the smart money, we can see that there lies a certain “tier” of funds that elected to cut their entire stakes at the end of the first quarter. Interestingly, John Fichthorn’s Dialectic Capital Management cut the biggest investment of all the hedgies we track, valued at close to $0.8 million in stock., and Matthew Hulsizer of PEAK6 Capital Management was right behind this move, as the fund said goodbye to about $0.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading PennantPark Investment Corp. (NASDAQ:PNNT)?

Insider purchases made by high-level executives is most useful when the company in question has experienced transactions within the past six months. Over the last 180-day time period, PennantPark Investment Corp. (NASDAQ:PNNT) has experienced 1 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to PennantPark Investment Corp. (NASDAQ:PNNT). These stocks are Westwood Holdings Group, Inc. (NYSE:WHG), Capital Southwest Corporation (NASDAQ:CSWC), THL Credit, Inc. (NASDAQ:TCRD), Pzena Investment Management, Inc. (NYSE:PZN), and Noah Holdings Limited (ADR) (NYSE:NOAH). This group of stocks belong to the asset management industry and their market caps match PNNT’s market cap.

Page 1 of 2