Is Hatteras Financial Corp. (HTS) A Good Stock To Buy?

Because Hatteras Financial Corp. (NYSE:HTS) has experienced falling interest from hedge fund managers, we can see that there lies a certain “tier” of hedgies who were dropping their positions entirely by the end of the third quarter. Interestingly, John Overdeck and David Siegel’s Two Sigma Advisors dropped the largest stake of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $4.6 million in stock. Stephen Feinberg’s fund, Cerberus Capital Management, also said goodbye to its stock, about $1.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 4 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Hatteras Financial Corp. (NYSE:HTS) but similarly valued. We will take a look at WNS (Holdings) Limited (ADR) (NYSE:WNS), Alon USA Partners LP (NYSE:ALDW), Meritage Homes Corp (NYSE:MTH), and Nektar Therapeutics (NASDAQ:NKTR). This group of stocks’ market valuations are closest to HTS’s market valuation.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $92 million. That figure was $102 million in HTS’s case. Meritage Homes Corp (NYSE:MTH) is the most popular stock in this table. On the other hand Alon USA Partners LP (NYSE:ALDW) is the least popular one with only 5 bullish hedge fund positions. Hatteras Financial Corp. (NYSE:HTS) 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 MTH might be a better candidate to consider a long position.