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We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of Main Street Capital Corporation (NYSE:MAIN) based on that data.
Is Main Street Capital Corporation (NYSE:MAIN) a buy here? The smart money was selling. The number of long hedge fund positions fell by 3 in recent months. Main Street Capital Corporation (NYSE:MAIN) was in 4 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 11. Our calculations also showed that MAIN 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.
At the moment there are tons of formulas investors put to use to analyze publicly traded companies. A couple of the most under-the-radar formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can trounce the S&P 500 by a solid amount (see the details here).
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. Now we're going to take a look at the latest hedge fund action regarding Main Street Capital Corporation (NYSE:MAIN).
Hedge fund activity in Main Street Capital Corporation (NYSE:MAIN)
Heading into the fourth quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -43% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in MAIN a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Robert B. Gillam's McKinley Capital Management has the number one position in Main Street Capital Corporation (NYSE:MAIN), worth close to $6.3 million, accounting for 0.5% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which holds a $3.3 million call position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism include David Harding's Winton Capital Management, John Overdeck and David Siegel's Two Sigma Advisors and Matthew Hulsizer's PEAK6 Capital Management. In terms of the portfolio weights assigned to each position McKinley Capital Management allocated the biggest weight to Main Street Capital Corporation (NYSE:MAIN), around 0.49% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, earmarking 0.11 percent of its 13F equity portfolio to MAIN.
Since Main Street Capital Corporation (NYSE:MAIN) has witnessed a decline in interest from the smart money, logic holds that there exists a select few money managers who sold off their full holdings last quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dropped the largest position of the 750 funds monitored by Insider Monkey, comprising an estimated $0.6 million in stock. Ken Griffin's fund, Citadel Investment Group, also sold off its stock, about $0.4 million worth. These moves are interesting, as aggregate hedge fund interest fell by 3 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to Main Street Capital Corporation (NYSE:MAIN). These stocks are Allegiant Travel Company (NASDAQ:ALGT), Cimpress plc (NASDAQ:CMPR), Inovio Pharmaceuticals Inc (NYSE:INO), Moelis & Company (NYSE:MC), Associated Banc Corp (NYSE:ASB), Integer Holdings Corporation (NYSE:ITGR), and South Jersey Industries Inc (NYSE:SJI). This group of stocks' market valuations match MAIN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALGT,24,344081,1 CMPR,25,260556,0 INO,16,66802,2 MC,13,68166,5 ASB,21,177092,-1 ITGR,22,145970,5 SJI,13,80266,-1 Average,19.1,163276,1.6 [/table]
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 $163 million. That figure was $11 million in MAIN's case. Cimpress plc (NASDAQ:CMPR) is the most popular stock in this table. On the other hand Moelis & Company (NYSE:MC) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Main Street Capital Corporation (NYSE:MAIN) is even less popular than MC. Our overall hedge fund sentiment score for MAIN is 12.9. 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. Hedge funds clearly dropped the ball on MAIN as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on MAIN as the stock returned 10.9% since Q3 (through November 27th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.