This Metric Says You Are Smart to Sell PennyMac Mortgage Investment Trust (PMT)

Is PennyMac Mortgage Investment Trust (NYSE:PMT) going to take off soon? Money managers are turning less bullish. The number of long hedge fund positions were cut by 6 lately.

At the moment, there are a multitude of gauges shareholders can use to watch publicly traded companies. A couple of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite money managers can outclass the broader indices by a healthy margin (see just how much).

Equally as key, positive insider trading activity is another way to parse down the financial markets. There are a number of stimuli for an executive to cut shares of his or her company, but only one, very clear reason why they would buy. Various academic studies have demonstrated the valuable potential of this method if investors know where to look (learn more here).

Consequently, it’s important to take a glance at the recent action regarding PennyMac Mortgage Investment Trust (NYSE:PMT).

What have hedge funds been doing with PennyMac Mortgage Investment Trust (NYSE:PMT)?

Heading into Q2, a total of 16 of the hedge funds we track held long positions in this stock, a change of -27% from the first quarter. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably.

Of the funds we track, Glenn Russell Dubin’s Highbridge Capital Management had the largest position in PennyMac Mortgage Investment Trust (NYSE:PMT), worth close to $63.7 million, comprising 0.7% of its total 13F portfolio. The second largest stake is held by John Burbank of Passport Capital, with a $53 million position; 2.1% of its 13F portfolio is allocated to the company. Some other hedge funds with similar optimism include Jim Simons’s Renaissance Technologies, Chuck Royce’s Royce & Associates and Jonathon Jacobson’s Highfields Capital Management.

Seeing as PennyMac Mortgage Investment Trust (NYSE:PMT) has experienced a declination in interest from hedge fund managers, logic holds that there exists a select few money managers who were dropping their positions entirely in Q1. It’s worth mentioning that Anand Parekh’s Alyeska Investment Group dropped the biggest stake of the 450+ funds we track, valued at close to $21.5 million in stock., and Dmitry Balyasny of Balyasny Asset Management was right behind this move, as the fund dumped about $11.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds in Q1.

How have insiders been trading PennyMac Mortgage Investment Trust (NYSE:PMT)?

Insider purchases made by high-level executives is best served when the company in focus has seen transactions within the past six months. Over the last 180-day time period, PennyMac Mortgage Investment Trust (NYSE:PMT) has seen 1 unique insiders buying, and 9 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to PennyMac Mortgage Investment Trust (NYSE:PMT). These stocks are ARMOUR Residential REIT, Inc. (NYSE:ARR), CYS Investments Inc (NYSE:CYS), Colonial Properties Trust Inc (NYSE:CLP), Education Realty Trust, Inc. (NYSE:EDR), and Sun Communities Inc (NYSE:SUI). This group of stocks belong to the reit – residential industry and their market caps resemble PMT’s market cap.