Should You Add Prospect Capital Corporation (PSEC) to Your Portfolio?

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As one would reasonably expect, key hedge funds have jumped into Prospect Capital Corporation (NASDAQ:PSEC) headfirst. Citadel Investment Group, led by Ken Griffin, assembled the largest call position in Prospect Capital Corporation (NASDAQ:PSEC). Citadel Investment Group had $0.8 million invested in the company at the end of the quarter. Joshua Packwood and Schuster Tanger’s Radix Partners also initiated a $0.4 million position during the quarter. The other funds with brand new PSEC positions are Matthew Tewksbury’s Stevens Capital Management, Israel Englander’s Millennium Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Prospect Capital Corporation (NASDAQ:PSEC) but similarly valued. We will take a look at Chicago Bridge & Iron Company N.V. (NYSE:CBI), Littelfuse, Inc. (NASDAQ:LFUS), Zendesk Inc (NYSE:ZEN), and United Bankshares, Inc. (NASDAQ:UBSI). All of these stocks’ market caps match PSEC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CBI 27 337140 -3
LFUS 14 178544 0
ZEN 26 308682 -1
UBSI 8 38600 2

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $216 million. That figure was just $15 million in PSEC’s case. Chicago Bridge & Iron Company N.V. (NYSE:CBI) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only eight funds having reported long positions. Prospect Capital Corporation (NASDAQ:PSEC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Chicago Bridge & Iron Company N.V. (NYSE:CBI) might be a better candidate to consider taking a long position in.

Disclosure: none

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