Here is What Hedge Funds Think About Apollo Residential Mortgage Inc (AMTG)

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Apollo Residential Mortgage Inc (NYSE:AMTG).

Is Apollo Residential Mortgage Inc (NYSE:AMTG) a healthy stock for your portfolio? Hedge funds are getting less bullish. The number of long hedge fund bets went down by 2 in recent months. AMTG was in 11 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with AMTG holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Natural Health Trends Corp. (NASDAQ:NHTC), Calix Inc (NYSE:CALX), and Waterstone Financial, Inc. (NASDAQ:WSBF) to gather more data points.

If you’d ask most stock holders, hedge funds are perceived as slow, outdated financial tools of the past. While there are over 8000 funds trading today, Our researchers hone in on the moguls of this club, approximately 700 funds. Most estimates calculate that this group of people handle the lion’s share of the hedge fund industry’s total capital, and by monitoring their matchless stock picks, Insider Monkey has brought to light a number of investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, we’re going to view the new action regarding Apollo Residential Mortgage Inc (NYSE:AMTG).

How are hedge funds trading Apollo Residential Mortgage Inc (NYSE:AMTG)?

Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the previous quarter. With hedgies’ capital changing hands, there exist a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Brian Taylor’s Pine River Capital Management has the biggest position in Apollo Residential Mortgage Inc (NYSE:AMTG), worth close to $15.6 million, corresponding to 0.2% of its total 13F portfolio. On Pine River Capital Management’s heels is Mangrove Partners, led by Nathaniel August, holding a $12.9 million position; 3% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish contain David Dreman’s Dreman Value Management, Richard Mashaal’s Rima Senvest Management and Israel Englander’s Millennium Management.

Because Apollo Residential Mortgage Inc (NYSE:AMTG) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there exist a select few hedgies that elected to cut their entire stakes last quarter. At the top of the heap, Jim Simons’s Renaissance Technologies sold off the largest position of the “upper crust” of funds monitored by Insider Monkey, comprising close to $0.8 million in stock, and David Costen Haley’s HBK Investments was right behind this move, as the fund sold off about $0.4 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Apollo Residential Mortgage Inc (NYSE:AMTG). We will take a look at Natural Health Trends Corp. (NASDAQ:NHTC), Calix Inc (NYSE:CALX), Waterstone Financial, Inc. (NASDAQ:WSBF), and Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI). This group of stocks’ market values match AMTG’s market value.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $45 million in AMTG’s case. Calix Inc (NYSE:ALX) is the most popular stock in this table. On the other hand Waterstone Financial, Inc. (NASDAQ:WSBF) is the least popular one with only 10 bullish hedge fund positions. Apollo Residential Mortgage Inc (NYSE:AMTG), with 11 bullish hedge fund positions, is not the least popular stock in this group, but it has not succeeded in attracting much attention from investors. This may imply that it is not a stock worth considering; therefore, we’d rather spend our time researching stocks that hedge funds are collectively most bullish on. In this case, CALX might be a better alternative.