American Capital Agency Corp. (NASDAQ:AGNC) is down more than 25% since the start of 2013, and it hasn't avoided the rest of the broader mREIT industry selloff. We could sit here and spout of FFO ratios until we turned blue in the face, but we have a better metric for you today.
If you were to ask many market players, hedge funds are viewed as overrated, old financial tools of a period lost to current times. Although there are more than 8,000 hedge funds with their doors open in present day, this site looks at the crème de la crème of this club, close to 525 funds. It is widely held that this group has its hands on the majority of all hedge funds' total capital, and by tracking their highest quality equity investments, we've uncovered a number of investment strategies that have historically outpaced the S&P 500. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we've began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).
Just as useful, bullish insider trading sentiment is a second way to analyze the marketplace. Just as you'd expect, there are a number of reasons for an insider to cut shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the impressive potential of this method if "monkeys" understand where to look (learn more here).
What's more, we're going to examine the latest info for American Capital Agency Corp. (NASDAQ:AGNC).
Heading into Q3, a total of 24 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially.
When using filings from the hedgies we track, Fir Tree, managed by Jeffrey Tannenbaum, holds the most valuable position in American Capital Agency Corp. (NASDAQ:AGNC). Fir Tree has a $71 million call position in the stock, comprising 1% of its 13F portfolio. On Fir Tree's heels is Millennium Management, managed by Israel Englander, which held a $31.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Jim Simons's Renaissance Technologies, Brian Taylor's Pine River Capital Management and Michael A. Price and Amos Meron's Empyrean Capital Partners.
Due to the fact American Capital Agency Corp. (NASDAQ:AGNC) has faced declining interest from the smart money's best and brightest, logic holds that there was a specific group of funds who sold off their entire stakes heading into Q2. At the top of the heap, Brian Jackelow's SAB Capital Management cut the largest investment of the 450+ funds we monitor, worth an estimated $38 million in stock. Phill Gross and Robert Atchinson's fund, Adage Capital Management, also cut its stock, about $25.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Legal insider trading, particularly when it's bullish, is most useful when the primary stock in question has seen transactions within the past six months. Over the last six-month time period, American Capital Agency Corp. (NASDAQ:AGNC) has experienced 1 unique insiders buying, and 2 insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators in other stocks similar to American Capital Agency Corp. (NASDAQ:AGNC). These stocks are Camden Property Trust (NYSE:CPT), UDR, Inc. (NYSE:UDR), Plum Creek Timber Co. Inc. (NYSE:PCL), Equity Residential (NYSE:EQR), and AvalonBay Communities Inc (NYSE:AVB). This group of stocks are the members of the reit - residential industry and their market caps are closest to AGNC's market cap.