Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: AG Mortgage Investment Trust Inc (NYSE:MITT).
AG Mortgage Investment Trust Inc (NYSE:MITT) was in 7 hedge funds’ portfolios at the end of the third quarter of 2015. AG Mortgage Investment Trust Inc (NYSE:MITT) has seen an increase in hedge fund sentiment of late. There were 6 hedge funds in our database with AG Mortgage Investment Trust Inc (NYSE:MITT) positions 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 LivePerson, Inc. (NASDAQ:LPSN), FutureFuel Corp. (NYSE:FF), and Otonomy Inc (NASDAQ:OTIC) to gather more data points.
Follow Medidata Solutions Inc. (NASDAQ:MDSO)
Follow Medidata Solutions Inc. (NASDAQ:MDSO)
Today, there are a large number of signals market participants employ to analyze their stock investments. Two of the less utilized signals are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outperform the broader indices by a healthy margin (see the details here).
Now, let’s take a look at the latest action encompassing AG Mortgage Investment Trust Inc (NYSE:MITT).
How are hedge funds trading AG Mortgage Investment Trust Inc (NYSE:MITT)?
Heading into Q4, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 17% from the previous quarter. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Millennium Management, managed by Israel Englander, holds the largest position in AG Mortgage Investment Trust Inc (NYSE:MITT). Millennium Management has a $6.9 million position in the stock, comprising less than 0.1% of its 13F portfolio. The second most bullish fund manager is Angelo Gordon & Co, managed by John M. Angelo and Michael L. Gordon, which holds a $6.1 million position; 0.4% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish include Leon Cooperman’s Omega Advisors, John Overdeck and David Siegel’s Two Sigma Advisors, and D E Shaw.
As industrywide interest jumped, key hedge funds have jumped into AG Mortgage Investment Trust Inc (NYSE:MITT) headfirst. AQR Capital Management, managed by Cliff Asness, established the most outsized position in AG Mortgage Investment Trust Inc (NYSE:MITT). AQR Capital Management had $0.2 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.1 million position during the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as AG Mortgage Investment Trust Inc (NYSE:MITT) but similarly valued. These stocks are LivePerson, Inc. (NASDAQ:LPSN), FutureFuel Corp. (NYSE:FF), Otonomy Inc (NASDAQ:OTIC), and Newpark Resources Inc (NYSE:NR). All of these stocks’ market caps resemble AG Mortgage Investment Trust Inc (NYSE:MITT)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LPSN | 18 | 83021 | 4 |
| FF | 13 | 31873 | -1 |
| OTIC | 14 | 74199 | 1 |
| NR | 12 | 25213 | -2 |
As you can see, these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $17 million in AG Mortgage Investment Trust Inc (NYSE:MITT)’s case. LivePerson, Inc. (NASDAQ:LPSN) is the most popular stock in this table. On the other hand, Newpark Resources Inc (NYSE:NR) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks, AG Mortgage Investment Trust Inc (NYSE:MITT) is even less popular than Newpark Resources Inc (NYSE:NR). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.
