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 Hercules Capital Inc (NYSE:HTGC).
Is HTGC a good stock to buy now? Hercules Capital Inc (NYSE:HTGC) shareholders have witnessed a decrease in hedge fund interest lately. Hercules Capital Inc (NYSE:HTGC) was in 13 hedge funds' portfolios at the end of September. The all time high for this statistic is 16. There were 15 hedge funds in our database with HTGC holdings at the end of June. Our calculations also showed that HTGC 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.
To the average investor there are tons of signals shareholders can use to assess stocks. A couple of the most under-the-radar signals are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outperform the S&P 500 by a significant margin (see the details here).
David Siegel of Two Sigma Advisors
David Siegel of Two Sigma Advisors
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. Now we're going to take a gander at the new hedge fund action surrounding Hercules Capital Inc (NYSE:HTGC).
Do Hedge Funds Think HTGC Is A Good Stock To Buy Now?
At Q3's end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the second quarter of 2020. On the other hand, there were a total of 10 hedge funds with a bullish position in HTGC 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.
Among these funds, Shanda Asset Management held the most valuable stake in Hercules Capital Inc (NYSE:HTGC), which was worth $32.4 million at the end of the third quarter. On the second spot was McKinley Capital Management which amassed $4.7 million worth of shares. Polaris Capital Management, Two Sigma Advisors, and Winton Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Shanda Asset Management allocated the biggest weight to Hercules Capital Inc (NYSE:HTGC), around 2.22% of its 13F portfolio. McKinley Capital Management is also relatively very bullish on the stock, earmarking 0.37 percent of its 13F equity portfolio to HTGC.
Seeing as Hercules Capital Inc (NYSE:HTGC) has faced bearish sentiment from hedge fund managers, it's easy to see that there were a few money managers who sold off their positions entirely by the end of the third quarter. Intriguingly, Israel Englander's Millennium Management dumped the biggest investment of the 750 funds monitored by Insider Monkey, totaling about $2.7 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also dumped its stock, about $2 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks similar to Hercules Capital Inc (NYSE:HTGC). These stocks are NIC Inc. (NASDAQ:EGOV), Itau CorpBanca (NYSE:ITCB), Colony Capital Inc (NYSE:CLNY), M/I Homes Inc (NYSE:MHO), Livent Corporation (NYSE:LTHM), The Providence Service Corporation (NASDAQ:PRSC), and Glu Mobile Inc. (NASDAQ:GLUU). This group of stocks' market values match HTGC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EGOV,14,95062,-2 ITCB,1,1163,0 CLNY,24,188771,8 MHO,18,115813,3 LTHM,20,61214,1 PRSC,15,320755,3 GLUU,26,169466,-9 Average,16.9,136035,0.6 [/table]
As you can see these stocks had an average of 16.9 hedge funds with bullish positions and the average amount invested in these stocks was $136 million. That figure was $43 million in HTGC's case. Glu Mobile Inc. (NASDAQ:GLUU) is the most popular stock in this table. On the other hand Itau CorpBanca (NYSE:ITCB) is the least popular one with only 1 bullish hedge fund positions. Hercules Capital Inc (NYSE:HTGC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HTGC is 51.4. 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. 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 still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on HTGC as the stock returned 22.7% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
