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Hedge Funds Are Crazy About Invesco Mortgage Capital Inc (NYSE:IVR)

Invesco Mortgage Capital Inc (NYSE:IVR) was in 14 hedge funds’ portfolio at the end of December. IVR has experienced an increase in enthusiasm from smart money lately. There were 10 hedge funds in our database with IVR positions at the end of the previous quarter.

According to most traders, hedge funds are assumed to be slow, old investment vehicles of yesteryear. While there are more than 8000 funds in operation today, we at Insider Monkey look at the aristocrats of this group, around 450 funds. It is estimated that this group oversees the majority of all hedge funds’ total asset base, and by monitoring their top equity investments, we have unearthed a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 beaten the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).

Invesco Mortgage Capital Inc (NYSE:IVR)Just as key, optimistic insider trading sentiment is a second way to break down the stock market universe. Obviously, there are lots of stimuli for a corporate insider to downsize shares of his or her company, but just one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the impressive potential of this method if you know where to look (learn more here).

With all of this in mind, we’re going to take a gander at the recent action regarding Invesco Mortgage Capital Inc (NYSE:IVR).

How have hedgies been trading Invesco Mortgage Capital Inc (NYSE:IVR)?

In preparation for this year, a total of 14 of the hedge funds we track held long positions in this stock, a change of 40% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings meaningfully.

When looking at the hedgies we track, Ken Griffin’s Citadel Investment Group had the most valuable position in Invesco Mortgage Capital Inc (NYSE:IVR), worth close to $11 million, comprising 0% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, managed by Jim Simons, which held a $10 million position; 0.1% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Richard Driehaus’s Driehaus Capital, Brian Jackelow’s SAB Capital Management and Israel Englander’s Millennium Management.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Whitebox Advisors, managed by Andy Redleaf, initiated the largest position in Invesco Mortgage Capital Inc (NYSE:IVR). Whitebox Advisors had 3 million invested in the company at the end of the quarter. Brian Taylor’s Pine River Capital Management also initiated a $2 million position during the quarter. The following funds were also among the new IVR investors: David Costen Haley’s HBK Investments, John Thiessen’s Vertex One Asset Management, and Mike Vranos’s Ellington.

What do corporate executives and insiders think about Invesco Mortgage Capital Inc (NYSE:IVR)?

Insider buying is particularly usable when the company in question has seen transactions within the past half-year. Over the latest six-month time frame, Invesco Mortgage Capital Inc (NYSE:IVR) has seen 2 unique insiders buying, 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 Invesco Mortgage Capital Inc (NYSE:IVR). These stocks are Nationstar Mortgage Holdings Inc (NYSE:NSM), KKR Financial Holdings LLC (NYSE:KFN), Altisource Portfolio Solutions S.A. (NASDAQ:ASPS), Walter Investment Management Corp (NYSE:WAC), and Home Loan Servicing Solutions Ltd (NASDAQ:HLSS). This group of stocks are the members of the mortgage investment industry and their market caps are closest to IVR’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Nationstar Mortgage Holdings Inc (NYSE:NSM) 23 1 0
KKR Financial Holdings LLC (NYSE:KFN) 17 2 3
Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) 15 2 0
Walter Investment Management Corp (NYSE:WAC) 21 0 7
Home Loan Servicing Solutions Ltd (NASDAQ:HLSS) 21 4 0

With the returns shown by our tactics, retail investors must always pay attention to hedge fund and insider trading sentiment, and Invesco Mortgage Capital Inc (NYSE:IVR) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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