According to a recently submitted filing with the SEC, Leon Cooperman‘s Omega Advisors has added nearly 1.27 million shares to one of its favorite dividend picks, PennyMac Mortgage Investment Trust (NYSE:PMT). Accounting for this purchase, the fund now owns around 3.87 million shares, or 5.17% of all outstanding shares of the company. At the current market price of PennyMac Mortgage Investment Trust (NYSE:PMT)’s shares, Omega Advisors stake is worth over $58.5 million.
Leon Cooperman is one of the most recognized hedge fund managers on Wall Street. He established Omega Advisors, a New York-based long/short equity hedge fund, in 1991. Prior to starting Omega, he had already made a name for himself as the Chairman and Chief Executive Officer of the asset management arm of Goldman Sachs Group Inc (NYSE:GS), where he served for 25 years. As of August 4, Omega Advisors has an estimated $11.2 billion in assets under management (AUM). Mr. Cooperman holds an MBA from Columbia Business School and has been recognized as one of the highest paid hedge fund managers on the Street several times, most recently in 2013 and 2014 by Forbes. As of June 30, Omega Advisors’ U.S public equity portfolio was worth above $6.27 billion, with the fund’s top ten picks accounting for almost one-third of that value.
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We track hedge funds and other prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about six basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated ten percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 in real time and these stocks beat the market by over 60 percentage points (118% return vs. the S&P 500’s 57.6% gain) over the last 36 months (see the details here).
At the end of June, a total of 23 hedge funds among those we cover had a stake in PennyMac Mortgage Investment Trust, with the aggregate value of their holdings in the stock amounting to almost $194 million. Even after cutting his stake in half during the April-June period, Emanuel J. Friedman‘s EJF Capital was the second-largest shareholder of PennyMac Mortgage Investment Trust among the funds in our database with over 2.13 million shares, trailing only Omega Advisors. EJF Capital was followed by Israel Englander’s Millennium Management, which held slightly above 1.95 million shares.
PennyMac Mortgage Investment Trust (NYSE:PMT) is a Moorpark, California-based Real Estate Investment Trust (REIT) which primarily invests in mortgage-related assets and residential mortgage loans. The REIT is externally-managed and advised by PennyMac Loan Services and PNMAC Capital Management, LLC. It made its secondary market debut in July, 2009 via an IPO priced at $20 per share. Although shares of PennyMac Mortgage Investment Trust had a spectacular bull run throughout 2012, they began to gradually decline starting in 2013, which has seen them fall to their current level of around $15. This share price collapse coupled with the quarterly dividend of $0.61 per share that the REIT currently pays has resulted in PennyMac Mortgage Investment Trust boasting a terrific annual dividend yield of 16.13%. Owing to such a high annual dividend yield, the REIT recently made it to Insider Monkey’s list of 5 Ultra-High Dividend Stocks that hedge funds love.
PennyMac Mortgage Investment Trust declared its second quarter earnings on August 8, reporting EPS of $0.36 on revenue of $69.80 million, compared to EPS of $0.49 on revenue of $30.22 million that analysts were expecting. This earnings release was followed by the REIT’s announcement on August 19 that it will be buying back $150 million worth of shares. On September 11, analysts at JMP Securities reiterated their ‘Market Outperform’ rating on the stock, while lowering their price target to $19 from $21, which at current market price represents an upside potential of 25.5%.
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