The successful 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 AGNC Investment Corp (NASDAQ:AGNC) from the perspective of those successful funds.
AGNC Investment Corp (NASDAQ:AGNC) was in 11 hedge funds’ portfolios at the end of September. AGNC has seen a decrease in hedge fund interest lately. There were 19 hedge funds in our database with AGNC 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 FMC Corp (NYSE:FMC), SS and C Technologies Holdings Inc (NASDAQ:SSNC), and Enable Midstream Partners LP (NYSE:ENBL) to gather more data points.
Follow Agnc Investment Corp. (NASDAQ:AGNC)
Follow Agnc Investment Corp. (NASDAQ:AGNC)
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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With all of this in mind, we’re going to view the key action surrounding AGNC Investment Corp (NASDAQ:AGNC).
What have hedge funds been doing with AGNC Investment Corp (NASDAQ:AGNC)?
Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a plunge of 42% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AGNC over the last 5 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Charles Clough’s Clough Capital Partners has the biggest position in AGNC Investment Corp (NASDAQ:AGNC), worth close to $37.4 million, amounting to 2% of its total 13F portfolio. The second largest stake is held by Balyasny Asset Management, led by Dmitry Balyasny, holding a $35.1 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism include Charles de Vaulx’s International Value Advisers, D E Shaw, one of the biggest hedge funds in the world, and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually cut their positions entirely. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management cut the largest stake of all the hedgies followed by Insider Monkey, worth about $24.9 million in AGNC Investment Corp (NASDAQ:AGNC) stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $15.5 million worth of shares.
Let’s check out hedge fund activity in other stocks similar to AGNC Investment Corp (NASDAQ:AGNC). We will take a look at FMC Corp (NYSE:FMC), SS and C Technologies Holdings Inc (NASDAQ:SSNC), Enable Midstream Partners LP (NYSE:ENBL), and HD Supply Holdings Inc (NASDAQ:HDS). This group of stocks’ market valuations are similar to AGNC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FMC | 28 | 1015438 | -9 |
| SSNC | 30 | 1121001 | -1 |
| ENBL | 4 | 8427 | -2 |
| HDS | 40 | 1866259 | -7 |
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was roughly $1 billion. That figure was a meager $155 million in AGNC’s case. HD Supply Holdings Inc (NASDAQ:HDS) is the most popular stock in this table. On the other hand Enable Midstream Partners LP (NYSE:ENBL) is the least popular one with only 4 bullish hedge fund positions. AGNC Investment Corp (NASDAQ:AGNC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HDS might be a better candidate to consider taking a long position in.
Disclosure: None
