The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at PennyMac Mortgage Investment Trust (NYSE:PMT) from the perspective of those elite funds.
PennyMac Mortgage Investment Trust (NYSE:PMT) was in 17 hedge funds’ portfolios at the end of September. PMT shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 23 hedge funds in our database with PMT positions at the end of the previous quarter. At the end of this article we will also compare PMT to other stocks including Flagstar Bancorp Inc (NYSE:FBC), NIC Inc. (NASDAQ:EGOV), and Smart & Final Stores Inc (NYSE:SFS) to get a better sense of its popularity.
Follow Pennymac Mortgage Investment Trust (NYSE:PMT)
Follow Pennymac Mortgage Investment Trust (NYSE:PMT)
Keeping this in mind, we’re going to review the latest action encompassing PennyMac Mortgage Investment Trust (NYSE:PMT).
Hedge fund activity in PennyMac Mortgage Investment Trust (NYSE:PMT)
Heading into Q4, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -26% from the second quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, John Khoury’s Long Pond Capital has the most valuable position in PennyMac Mortgage Investment Trust (NYSE:PMT), worth close to $40.3 million, corresponding to 1.7% of its total 13F portfolio. The second most bullish fund manager is Omega Advisors, managed by Leon Cooperman, which holds an $28.8 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Other professional money managers that are bullish comprise Charles Clough’s Clough Capital Partners, Anand Parekh’s Alyeska Investment Group and Jonathon Jacobson’s Highfields Capital Management.
Because PennyMac Mortgage Investment Trust (NYSE:PMT) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there exists a select few fund managers that decided to sell off their full holdings in the third quarter. Intriguingly, Emanuel J. Friedman’s EJF Capital said goodbye to the biggest stake of all the hedgies tracked by Insider Monkey, totaling close to $37.2 million in stock. Brian Taylor’s fund, Pine River Capital Management, also said goodbye to its stock, about $13.8 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 6 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as PennyMac Mortgage Investment Trust (NYSE:PMT) but similarly valued on the next page.
These stocks are Flagstar Bancorp Inc (NYSE:FBC), NIC Inc. (NASDAQ:EGOV), Smart & Final Stores Inc (NYSE:SFS), and New Gold Inc. (USA) (NYSEAMEX:NGD). This group of stocks’ market values are closest to PMT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FBC | 17 | 65915 | 6 |
| EGOV | 15 | 52849 | 3 |
| SFS | 11 | 145311 | -2 |
| NGD | 11 | 61004 | -5 |
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $81 million. That figure was $131 million in PMT’s case. Flagstar Bancorp Inc (NYSE:FBC) is the most popular stock in this table. On the other hand Smart & Final Stores Inc (NYSE:SFS) is the least popular one with only 11 bullish hedge fund positions. PennyMac Mortgage Investment Trust (NYSE:PMT) 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 FBC might be a better candidate to consider a long position.
