According to most investors, hedge funds are seen as worthless, old investment vehicles of the past. While there are more than 8000 funds trading at present, we at Insider Monkey choose to focus on the aristocrats of this group, about 450 funds. Most estimates calculate that this group has its hands on the majority of the smart money’s total asset base, and by paying attention to their best equity investments, we have spotted a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as key, optimistic insider trading activity is a second way to parse down the investments you’re interested in. Obviously, there are lots of stimuli for a corporate insider to sell shares of his or her company, but only one, very clear reason why they would buy. Several empirical studies have demonstrated the impressive potential of this strategy if “monkeys” know where to look (learn more here).
With all of this in mind, let’s take a gander at the latest action encompassing Arlington Asset Investment Corp (NYSE:AI).
Hedge fund activity in Arlington Asset Investment Corp (NYSE:AI)
At the end of the fourth quarter, a total of 6 of the hedge funds we track held long positions in this stock, a change of -33% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially.
Of the funds we track, Ken Griffin’s Citadel Investment Group had the most valuable position in Arlington Asset Investment Corp (NYSE:AI), worth close to $1.8 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $1.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish include Andrew R. Midler’s Savitr Capital, Jim Simons’s Renaissance Technologies and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Because Arlington Asset Investment Corp (NYSE:AI) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of funds that decided to sell off their full holdings in Q4. Interestingly, John Overdeck and David Siegel’s Two Sigma Advisors dumped the biggest investment of the “upper crust” of funds we key on, comprising an estimated $1.8 million in stock.. Cliff Asness’s fund, AQR Capital Management, also sold off its stock, about $1.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 3 funds in Q4.
Insider trading activity in Arlington Asset Investment Corp (NYSE:AI)
Insider purchases made by high-level executives is best served when the company in focus has experienced transactions within the past six months. Over the latest six-month time period, Arlington Asset Investment Corp (NYSE:AI) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Arlington Asset Investment Corp (NYSE:AI). These stocks are Hercules Technology Growth Capital Inc (NYSE:HTGC), America First Tax Exempt Investors, L.P. (NASDAQ:ATAX), Marlin Business Services Corp. (NASDAQ:MRLN), Western Asset Mortgage Capital Corp (NYSE:WMC), and Ellington Financial LLC (NYSE:EFC). This group of stocks are in the mortgage investment industry and their market caps are similar to AI’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Hercules Technology Growth Capital Inc (NYSE:HTGC) | 5 | 0 | 0 |
| America First Tax Exempt Investors, L.P. (NASDAQ:ATAX) | 1 | 2 | 0 |
| Marlin Business Services Corp. (NASDAQ:MRLN) | 1 | 1 | 5 |
| Western Asset Mortgage Capital Corp (NYSE:WMC) | 12 | 3 | 0 |
| Ellington Financial LLC (NYSE:EFC) | 5 | 0 | 1 |
With the returns shown by Insider Monkey’s tactics, everyday investors must always pay attention to hedge fund and insider trading sentiment, and Arlington Asset Investment Corp (NYSE:AI) is no exception.
