Should You Buy Marlin Business Services Corp. (MRLN)?

As industrywide interest jumped, key hedge funds have been driving this bullishness. Arrowstreet Capital assembled the biggest position in Marlin Business Services Corp. (NASDAQ:MRLN). Arrowstreet Capital had $0.5 million invested in the company at the end of the quarter. Matthew Lindenbaum’s Basswood Capital also made a $0.4 million investment in the stock during the quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Marlin Business Services Corp. (NASDAQ:MRLN) but similarly valued. We will take a look at Container Store Group Inc (NYSE:TCS), Olympic Steel, Inc. (NASDAQ:ZEUS), Patriot National Inc (NYSE:PN), and JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO). This group of stocks’ market values resemble MRLN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TCS 7 13829 -5
ZEUS 9 15182 -1
PN 8 16926 3
JASO 6 4830 -2

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $64 million in MRLN’s case. Olympic Steel, Inc. (NASDAQ:ZEUS) is the most popular stock in this table. On the other hand JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) is the least popular one with only 6 bullish hedge fund positions. Marlin Business Services Corp. (NASDAQ:MRLN) 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 ZEUS might be a better candidate to consider taking a long position in.

Disclosure: None