Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards American Capital Ltd. (NASDAQ:ACAS).
American Capital Ltd. (NASDAQ:ACAS) was in 36 hedge funds’ portfolios at the end of the third quarter of 2015. ACAS investors should pay attention to a decrease in support from the world’s most elite money managers recently. There were 38 hedge funds in our database with ACAS holdings at the end of the previous quarter. At the end of this article we will also compare ACAS to other stocks including RLJ Lodging Trust (NYSE:RLJ), Webster Financial Corporation (NYSE:WBS), and Portland General Electric Company (NYSE:POR) to get a better sense of its popularity.
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Keeping this in mind, let’s analyze the fresh action encompassing American Capital Ltd. (NASDAQ:ACAS).
What have hedge funds been doing with American Capital Ltd. (NASDAQ:ACAS)?
At the end of the third quarter, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Pine River Capital Management, managed by Brian Taylor, holds the number one position in American Capital Ltd. (NASDAQ:ACAS). Pine River Capital Management has an $163 million position in the stock, comprising 2.5% of its 13F portfolio. On Pine River Capital Management’s heels is Fir Tree, managed by Jeffrey Tannenbaum, which holds an $146.6 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism consist of Anthony Bozza’s Lakewood Capital Management, Emanuel J. Friedman’s EJF Capital and Andy Redleaf’s Whitebox Advisors.
Because American Capital Ltd. (NASDAQ:ACAS) has experienced a declination in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of funds that decided to sell off their positions entirely last quarter. It’s worth mentioning that David Costen Haley’s HBK Investments dropped the largest position of all the hedgies followed by Insider Monkey, totaling close to $105.1 million in stock, and Marc Majzner’s Clearline Capital was right behind this move, as the fund sold off about $15.7 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to American Capital Ltd. (NASDAQ:ACAS). We will take a look at RLJ Lodging Trust (NYSE:RLJ), Webster Financial Corporation (NYSE:WBS), Portland General Electric Company (NYSE:POR), and HEICO Corporation (NYSE:HEI). This group of stocks’ market valuations are similar to ACAS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RLJ | 9 | 116093 | -3 |
| WBS | 25 | 453351 | 2 |
| POR | 13 | 159206 | -2 |
| HEI | 26 | 408494 | 5 |
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $284 million. That figure was $1,095 million in ACAS’s case. HEICO Corporation (NYSE:HEI) is the most popular stock in this table. On the other hand RLJ Lodging Trust (NYSE:RLJ) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks American Capital Ltd. (NASDAQ:ACAS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
