American Capital Agency Corp. (AGNC): Are Hedge Funds Right About This Stock?

The market has been volatile as the Federal Reserve winds down its easy money policies. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25th and the end of October. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of American Capital Agency Corp. (NASDAQ:AGNC) and find out how it is affected by hedge funds’ moves.

American Capital Agency Corp. (NASDAQ:AGNC) investors should be aware of an increase in enthusiasm from smart money lately. AGNC was in 26 hedge funds’ portfolios at the end of September. There were 19 hedge funds in our database with AGNC positions at the end of the previous quarter. At the end of this article we will also compare AGNC to other stocks including Centene Corp (NYSE:CNC), Jones Lang LaSalle Inc (NYSE:JLL), and Omega Healthcare Investors Inc (NYSE:OHI) to get a better sense of its popularity.

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Now, we’re going to view the new action encompassing American Capital Agency Corp. (NASDAQ:AGNC).

Hedge fund activity in American Capital Agency Corp. (NASDAQ:AGNC)

At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 37% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Stephen Feinberg’s Cerberus Capital Management has the most valuable position in American Capital Agency Corp. (NASDAQ:AGNC), worth close to $139.6 million, corresponding to 11.6% of its total 13F portfolio. The second most bullish fund manager is Whitebox Advisors, led by Andy Redleaf, holding a $72.9 million position; the fund has 3.3% of its 13F portfolio invested in the stock. Some other peers with similar optimism contain Charles de Vaulx’s International Value Advisers, and Brian Taylor’s Pine River Capital Management.

As aggregate interest increased, specific money managers have jumped into American Capital Agency Corp. (NASDAQ:AGNC) headfirst. Soros Fund Management, managed by George Soros, established the largest position in American Capital Agency Corp. (NASDAQ:AGNC). Soros Fund Management had $21 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $18.7 million investment in the stock during the quarter. The other funds with brand new AGNC positions are Dmitry Balyasny’s Balyasny Asset Management, Benjamin A. Smith’s Laurion Capital Management, and Richard Driehaus’s Driehaus Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as American Capital Agency Corp. (NASDAQ:AGNC) but similarly valued. We will take a look at Centene Corp (NYSE:CNC), Jones Lang LaSalle Inc (NYSE:JLL), Omega Healthcare Investors Inc (NYSE:OHI), and Camden Property Trust (NYSE:CPT). This group of stocks’ market caps resemble AGNC’s market cap.

As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $339 million. That figure was $473 million in AGNC’s case. Centene Corp (NYSE:CNC) is the most popular stock in this table. On the other hand Omega Healthcare Investors Inc (NYSE:OHI) is the least popular one with only 14 bullish hedge fund positions. American Capital Agency Corp. (NASDAQ:AGNC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CNC might be a better candidate to consider a long position.