Chimera Investment Corporation (NYSE:CIM) investors should be aware of a decrease in hedge fund interest lately.
If you'd ask most investors, hedge funds are perceived as worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, we at Insider Monkey hone in on the crème de la crème of this group, around 450 funds. It is widely believed that this group controls the majority of all hedge funds' total capital, and by watching their highest performing stock picks, we have revealed a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as important, positive insider trading sentiment is a second way to break down the financial markets. Just as you'd expect, there are lots of stimuli for a corporate insider to drop shares of his or her company, but just one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this tactic if shareholders know where to look (learn more here).
Consequently, it's important to take a peek at the recent action surrounding Chimera Investment Corporation (NYSE:CIM).
At the end of the first quarter, a total of 22 of the hedge funds we track were bullish in this stock, a change of -4% from the first quarter. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes significantly.
When looking at the hedgies we track, Leon Cooperman's Omega Advisors had the largest position in Chimera Investment Corporation (NYSE:CIM), worth close to $155.7 million, accounting for 2.4% of its total 13F portfolio. Coming in second is Dan Loeb of Third Point, with a $47.9 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Larry Robbins's Glenview Capital, Wayne Cooperman's Cobalt Capital Management and Daniel Arbess's Xerion.
Seeing as Chimera Investment Corporation (NYSE:CIM) has experienced a declination in interest from hedge fund managers, logic holds that there lies a certain "tier" of funds that slashed their full holdings at the end of the first quarter. It's worth mentioning that Brian Taylor's Pine River Capital Management dropped the biggest position of the "upper crust" of funds we key on, totaling about $24.4 million in stock.. Paul Singer's fund, Elliott Management, also dropped its stock, about $12.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds at the end of the first quarter.
Insider buying is at its handiest when the company in question has experienced transactions within the past half-year. Over the latest 180-day time period, Chimera Investment Corporation (NYSE:CIM) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let's also take a look at hedge fund and insider activity in other stocks similar to Chimera Investment Corporation (NYSE:CIM). These stocks are Newcastle Investment Corp. (NYSE:NCT), Starwood Property Trust, Inc. (NYSE:STWD), Douglas Emmett, Inc. (NYSE:DEI), Retail Properties of America Inc (NYSE:RPAI), and MFA Financial, Inc. (NYSE:MFA). This group of stocks belong to the reit - diversified industry and their market caps are closest to CIM's market cap.