Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Javelin Mortgage Investment Corp (NYSE:JMI) from the perspective of those elite funds.
Hedge fund interest in Javelin Mortgage Investment Corp (NYSE:JMI) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare JMI to other stocks including MeetMe Inc (NASDAQ:MEET), Hansen Medical, Inc. (NASDAQ:HNSN), and Perceptron, Inc. (NASDAQ:PRCP) to get a better sense of its popularity.
If you’d ask most market participants, hedge funds are seen as worthless, old investment tools of years past. While there are greater than 8000 funds with their doors open at present, Our experts hone in on the elite of this club, approximately 700 funds. It is estimated that this group of investors handle the lion’s share of the smart money’s total asset base, and by following their top stock picks, Insider Monkey has unearthed numerous investment strategies that have historically outperformed the broader indices. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Keeping this in mind, we’re going to take a peek at the new action regarding Javelin Mortgage Investment Corp (NYSE:JMI).
How have hedgies been trading Javelin Mortgage Investment Corp (NYSE:JMI)?
Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Brian Taylor’s Pine River Capital Management has the largest position in Javelin Mortgage Investment Corp (NYSE:JMI), worth close to $1.9 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is Renaissance Technologies, led by Jim Simons, holding a $1.9 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions consist of D. E. Shaw’s D E Shaw, Paul J. Isaac’s Arbiter Partners Capital Management and Chao Ku’s Nine Chapters Capital Management.
On the other hand, there lies a certain “tier” of fund managers that slashed their positions in Javelin Mortgage Investment Corp (NYSE:JMI) entirely in the third quarter. Interestingly, Israel Englander’s Millennium Management dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, worth close to $0.1 million in call options.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Javelin Mortgage Investment Corp (NYSE:JMI) but similarly valued. These stocks are MeetMe Inc (NASDAQ:MEET), Hansen Medical, Inc. (NASDAQ:HNSN), Perceptron, Inc. (NASDAQ:PRCP), and Northern Technologies International Corp (NASDAQ:NTIC). All of these stocks’ market caps match JMI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MEET | 4 | 10132 | -3 |
| HNSN | 4 | 15439 | 1 |
| PRCP | 6 | 24255 | -1 |
| NTIC | 4 | 7297 | 0 |
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was just $4 million in JMI’s case. Perceptron, Inc. (NASDAQ:PRCP) is the most popular stock in this table, while MeetMe Inc (NASDAQ:MEET) is the least popular one with only 4 bullish hedge fund positions. Javelin Mortgage Investment Corp (NYSE:JMI) 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. In this regard PRCP might be a better candidate to consider a long position.
