With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Gladstone Investment Corporation (NASDAQ:GAIN).
Gladstone Investment Corporation (NASDAQ:GAIN) investors should be aware of a decrease in enthusiasm from smart money recently. Gladstone Investment Corporation (NASDAQ:GAIN) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 9. Our calculations also showed that GAIN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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Michael Gelband of ExodusPoint Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s take a peek at the latest hedge fund action regarding Gladstone Investment Corporation (NASDAQ:GAIN).
How have hedgies been trading Gladstone Investment Corporation (NASDAQ:GAIN)?
At Q3’s end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -40% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GAIN over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John Overdeck and David Siegel’s Two Sigma Advisors has the number one position in Gladstone Investment Corporation (NASDAQ:GAIN), worth close to $1.5 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by ExodusPoint Capital, led by Michael Gelband, holding a $0.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism encompass Donald Sussman’s Paloma Partners, and . In terms of the portfolio weights assigned to each position ExodusPoint Capital allocated the biggest weight to Gladstone Investment Corporation (NASDAQ:GAIN), around 0.01% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, earmarking 0.0044 percent of its 13F equity portfolio to GAIN.
Due to the fact that Gladstone Investment Corporation (NASDAQ:GAIN) has experienced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there were a few money managers who sold off their entire stakes heading into Q4. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the biggest stake of the 750 funds monitored by Insider Monkey, valued at about $1.2 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund cut about $0.5 million worth. These transactions are interesting, as total hedge fund interest fell by 2 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Gladstone Investment Corporation (NASDAQ:GAIN) but similarly valued. We will take a look at Village Farms International, Inc. (NASDAQ:VFF), NeoPhotonics Corp (NYSE:NPTN), CooTek (Cayman) Inc. (NYSE:CTK), Covenant Logistics Group, Inc. (NASDAQ:CVLG), Vitru Limited (NASDAQ:VTRU), Metalla Royalty & Streaming Ltd. (NYSE:MTA), and Global Indemnity Group, LLC (NASDAQ:GBLI). This group of stocks’ market valuations are closest to GAIN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VFF | 7 | 7152 | 5 |
| NPTN | 17 | 52209 | -6 |
| CTK | 1 | 529 | -1 |
| CVLG | 11 | 24574 | 1 |
| VTRU | 9 | 11476 | 9 |
| MTA | 3 | 2860 | -1 |
| GBLI | 7 | 11899 | 3 |
| Average | 7.9 | 15814 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.9 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $2 million in GAIN’s case. NeoPhotonics Corp (NYSE:NPTN) is the most popular stock in this table. On the other hand CooTek (Cayman) Inc. (NYSE:CTK) is the least popular one with only 1 bullish hedge fund positions. Gladstone Investment Corporation (NASDAQ:GAIN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GAIN is 19.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on GAIN as the stock returned 8.8% since the end of the third quarter (through 11/23) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
