As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about AG Mortgage Investment Trust Inc (NYSE:MITT).
Is AG Mortgage Investment Trust Inc (NYSE:MITT) a buy here? Investors who are in the know were turning less bullish. The number of bullish hedge fund bets went down by 2 lately. AG Mortgage Investment Trust Inc (NYSE:MITT) was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 14. Our calculations also showed that MITT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to analyze the key hedge fund action encompassing AG Mortgage Investment Trust Inc (NYSE:MITT).
Do Hedge Funds Think MITT Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the first quarter of 2020. By comparison, 14 hedge funds held shares or bullish call options in MITT a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co has the number one position in AG Mortgage Investment Trust Inc (NYSE:MITT), worth close to $7.6 million, comprising 0.4% of its total 13F portfolio. Coming in second is Beach Point Capital Management, managed by Carl Goldsmith and Scott Klein, which holds a $4.1 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions include Renaissance Technologies, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Beach Point Capital Management allocated the biggest weight to AG Mortgage Investment Trust Inc (NYSE:MITT), around 0.67% of its 13F portfolio. Angelo Gordon & Co is also relatively very bullish on the stock, dishing out 0.39 percent of its 13F equity portfolio to MITT.
Due to the fact that AG Mortgage Investment Trust Inc (NYSE:MITT) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few funds who sold off their positions entirely heading into Q3. At the top of the heap, Emanuel J. Friedman’s EJF Capital dumped the largest stake of the “upper crust” of funds watched by Insider Monkey, totaling about $11.3 million in stock, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors was right behind this move, as the fund dropped about $0.1 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds heading into Q3.
Let’s check out hedge fund activity in other stocks similar to AG Mortgage Investment Trust Inc (NYSE:MITT). These stocks are Codorus Valley Bancorp, Inc. (NASDAQ:CVLY), Koss Corporation (NASDAQ:KOSS), Western New England Bancorp, Inc. (NASDAQ:WNEB), Genasys Inc. (NASDAQ:GNSS), Shore Bancshares, Inc. (NASDAQ:SHBI), J. Jill, Inc. (NYSE:JILL), and Tuscan Holdings Corp. II (NASDAQ:THCA). All of these stocks’ market caps are closest to MITT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVLY | 4 | 28773 | 1 |
| KOSS | 3 | 1782 | -1 |
| WNEB | 10 | 26955 | 5 |
| GNSS | 12 | 24439 | 5 |
| SHBI | 10 | 41352 | 2 |
| JILL | 7 | 24694 | 3 |
| THCA | 13 | 65696 | -2 |
| Average | 8.4 | 30527 | 1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.4 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $28 million in MITT’s case. Tuscan Holdings Corp. II (NASDAQ:THCA) is the most popular stock in this table. On the other hand Koss Corporation (NASDAQ:KOSS) is the least popular one with only 3 bullish hedge fund positions. AG Mortgage Investment Trust Inc (NYSE:MITT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MITT is 59.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately MITT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MITT were disappointed as the stock returned -12.1% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
