We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Invesco Mortgage Capital Inc (NYSE:IVR), and what that likely means for the prospects of the company and its stock.
Among the funds in our database, the interest towards Invesco Mortgage Capital Inc (NYSE:IVR) 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 IVR to other stocks including Argo Group International Holdings, Ltd. (NASDAQ:AGII), AZZ Incorporated (NYSE:AZZ), and First Majestic Silver Corp (NYSE:AG) to get a better sense of its popularity.
Follow Invesco Mortgage Capital Inc. (NYSE:IVR)
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to take a look at the new action regarding Invesco Mortgage Capital Inc (NYSE:IVR).
What does the smart money think about Invesco Mortgage Capital Inc (NYSE:IVR)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in Invesco Mortgage Capital Inc (NYSE:IVR), unchanged over the quarter. Below, you can check out the change in hedge fund sentiment towards IVR over the last five quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Nathaniel August’s Mangrove Partners has the most valuable position in Invesco Mortgage Capital Inc (NYSE:IVR), worth close to $32.2 million, amounting to 7.5% of its total 13F portfolio. Sitting at the No. 2 spot is Andy Redleaf’s Whitebox Advisors, with a $20.4 million position; 0.9% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish encompass Dmitry Balyasny’s Balyasny Asset Management, Ken Griffin’s Citadel Investment Group, and Israel Englander’s Millennium Management. We should note that two of these hedge funds (Mangrove Partners and Whitebox Advisors) 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.
Due to the fact that Invesco Mortgage Capital Inc (NYSE:IVR) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedge funds who sold off their full holdings during the third quarter. Intriguingly, Michael Platt and William Reeves’s BlueCrest Capital Mgmt. cashed in the biggest stake of the “upper crust” of funds tracked by Insider Monkey, worth about $0.2 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also said goodbye to its stock, about $0.1 million worth.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Invesco Mortgage Capital Inc (NYSE:IVR) but similarly valued. We will take a look at Argo Group International Holdings, Ltd. (NASDAQ:AGII), AZZ Incorporated (NYSE:AZZ), First Majestic Silver Corp (NYSE:AG), and Chemical Financial Corporation (NASDAQ:CHFC). This group of stocks’ market values match IVR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGII | 13 | 101675 | -5 |
| AZZ | 10 | 15821 | 1 |
| AG | 19 | 131473 | 9 |
| CHFC | 11 | 69100 | -1 |
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $80 million. That figure was $95 million in IVR’s case. First Majestic Silver Corp (NYSE:AG) is the most popular stock in this table. On the other hand AZZ Incorporated (NYSE:AZZ) is the least popular one with only 10 bullish hedge fund positions. Invesco Mortgage Capital Inc (NYSE:IVR) 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 First Majestic Silver Corp (NYSE:AG) might be a better candidate to consider taking a long position in.
Disclosure: none
