Where Do Hedge Funds Stand On Golub Capital BDC Inc (GBDC)?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Golub Capital BDC Inc (NASDAQ:GBDC).

Golub Capital BDC Inc (NASDAQ:GBDC) has experienced a decrease in hedge fund sentiment lately. Golub Capital BDC Inc (NASDAQ:GBDC) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 16. There were 16 hedge funds in our database with GBDC positions at the end of the second quarter. Our calculations also showed that GBDC 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Charles Clough of Clough Capital Partners

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 15 best blue chip stocks 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. With all of this in mind we’re going to take a gander at the latest hedge fund action surrounding Golub Capital BDC Inc (NASDAQ:GBDC).

Do Hedge Funds Think GBDC Is A Good Stock To Buy Now?

At third quarter’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards GBDC over the last 21 quarters. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

The largest stake in Golub Capital BDC Inc (NASDAQ:GBDC) was held by Clough Capital Partners, which reported holding $14.1 million worth of stock at the end of September. It was followed by McKinley Capital Management with a $6.8 million position. Other investors bullish on the company included Citadel Investment Group, Arrowstreet Capital, and Polar Capital. In terms of the portfolio weights assigned to each position Clough Capital Partners allocated the biggest weight to Golub Capital BDC Inc (NASDAQ:GBDC), around 1.02% of its 13F portfolio. McKinley Capital Management is also relatively very bullish on the stock, designating 0.53 percent of its 13F equity portfolio to GBDC.

Because Golub Capital BDC Inc (NASDAQ:GBDC) has experienced falling interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of funds who sold off their full holdings heading into Q4. It’s worth mentioning that Daniel Johnson’s Gillson Capital sold off the largest position of the “upper crust” of funds monitored by Insider Monkey, worth about $3.2 million in stock. Ron Mass’s fund, Almitas Capital, also said goodbye to its stock, about $3.2 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 5 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Golub Capital BDC Inc (NASDAQ:GBDC) but similarly valued. We will take a look at Glaukos Corporation (NYSE:GKOS), WESCO International, Inc. (NYSE:WCC), LivaNova PLC (NASDAQ:LIVN), Atlas Corp. (NYSE:ATCO), VEON Ltd. (NASDAQ:VEON), F.N.B. Corp (NYSE:FNB), and Central Garden & Pet Co (NASDAQ:CENT). This group of stocks’ market caps are similar to GBDC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GKOS 15 126038 -3
WCC 29 612264 -5
LIVN 26 290777 -3
ATCO 10 922622 -2
VEON 8 16266 2
FNB 27 78152 3
CENT 19 143794 4
Average 19.1 312845 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.1 hedge funds with bullish positions and the average amount invested in these stocks was $313 million. That figure was $33 million in GBDC’s case. WESCO International, Inc. (NYSE:WCC) is the most popular stock in this table. On the other hand VEON Ltd. (NASDAQ:VEON) is the least popular one with only 8 bullish hedge fund positions. Golub Capital BDC Inc (NASDAQ:GBDC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GBDC is 27.8. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately GBDC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GBDC investors were disappointed as the stock returned 6.9% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.