Do Hedge Funds and Insiders Love American Capital Agency Corp. (AGNC)?

American Capital Agency Corp. (AGNC) shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months.

To most market participants, hedge funds are seen as underperforming, old financial vehicles of the past. While there are more than 8000 funds with their doors open today, we choose to focus on the upper echelon of this group, around 450 funds. It is estimated that this group oversees the lion’s share of all hedge funds’ total capital, and by watching their highest performing stock picks, we have unearthed a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as beneficial, bullish insider trading sentiment is another way to break down the financial markets. Obviously, there are a variety of incentives for an executive to cut shares of his or her company, but only one, very simple reason why they would buy. Plenty of academic studies have demonstrated the valuable potential of this strategy if investors know what to do (learn more here).

With all of this in mind, let’s take a look at the key action surrounding American Capital Agency Corp. (NASDAQ:AGNC).

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

In preparation for this quarter, a total of 24 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes substantially.

Of the funds we track, Brian Taylor’s Pine River Capital Management had the biggest position in American Capital Agency Corp. (NASDAQ:AGNC), worth close to $231 million, comprising 4.6% of its total 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $42.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Brian Jackelow’s SAB Capital Management, Israel Englander’s Millennium Management and Phill Gross and Robert Atchinson’s Adage Capital Management.

Seeing as American Capital Agency Corp. (NASDAQ:AGNC) has faced falling interest from the smart money, it’s safe to say that there lies a certain “tier” of hedgies that elected to cut their full holdings heading into Q2. Interestingly, Louis Bacon’s Moore Global Investments said goodbye to the biggest investment of the 450+ funds we watch, valued at an estimated $18.1 million in stock., and James Melcher of Balestra was right behind this move, as the fund dropped about $16 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading American Capital Agency Corp. (NASDAQ:AGNC)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past half-year. Over the last 180-day time frame, American Capital Agency Corp. (NASDAQ:AGNC) has seen 1 unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to American Capital Agency Corp. (NASDAQ:AGNC). These stocks are Camden Property Trust (NYSE:CPT), UDR, Inc. (NYSE:UDR), Plum Creek Timber Co. Inc. (NYSE:PCL), Equity Residential (NYSE:EQR), and AvalonBay Communities Inc (NYSE:AVB). This group of stocks are the members of the reit – residential industry and their market caps resemble AGNC’s market cap.