Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Chimera Investment Corporation (NYSE:CIM) based on that data.
Chimera Investment Corporation (NYSE:CIM) investors should be aware of an increase in hedge fund interest lately. Our calculations also showed that CIM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Leon Cooperman of Omega Advisors
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a gander at the latest hedge fund action surrounding Chimera Investment Corporation (NYSE:CIM).
How have hedgies been trading Chimera Investment Corporation (NYSE:CIM)?
At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CIM over the last 18 quarters. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
More specifically, Omega Advisors was the largest shareholder of Chimera Investment Corporation (NYSE:CIM), with a stake worth $30.9 million reported as of the end of September. Trailing Omega Advisors was HBK Investments, which amassed a stake valued at $4.9 million. Winton Capital Management, Arrowstreet Capital, and Driehaus Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Omega Advisors allocated the biggest weight to Chimera Investment Corporation (NYSE:CIM), around 3.99% of its 13F portfolio. Ellington is also relatively very bullish on the stock, earmarking 0.17 percent of its 13F equity portfolio to CIM.
As one would reasonably expect, key hedge funds were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the biggest position in Chimera Investment Corporation (NYSE:CIM). Arrowstreet Capital had $3.6 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also made a $1.7 million investment in the stock during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Mike Vranos’s Ellington, and Donald Sussman’s Paloma Partners.
Let’s now take a look at hedge fund activity in other stocks similar to Chimera Investment Corporation (NYSE:CIM). We will take a look at Summit Materials Inc (NYSE:SUM), Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA), Tower Semiconductor Ltd. (NASDAQ:TSEM), and Xencor Inc (NASDAQ:XNCR). This group of stocks’ market valuations are similar to CIM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SUM | 27 | 248345 | -8 |
| IBA | 3 | 28755 | 0 |
| TSEM | 11 | 272127 | -5 |
| XNCR | 13 | 162286 | -3 |
| Average | 13.5 | 177878 | -4 |
View table here if you experience formatting issues.
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 $178 million. That figure was $49 million in CIM’s case. Summit Materials Inc (NYSE:SUM) is the most popular stock in this table. On the other hand Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) is the least popular one with only 3 bullish hedge fund positions. Chimera Investment Corporation (NYSE:CIM) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately CIM wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CIM were disappointed as the stock returned 11.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Follow Chimera Investment Corp (NYSE:CIM)
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Disclosure: None. This article was originally published at Insider Monkey.
