The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Granite Point Mortgage Trust Inc. (NYSE:GPMT) based on those filings.
Hedge fund interest in Granite Point Mortgage Trust Inc. (NYSE:GPMT) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as TCP Capital Corp (NASDAQ:TCPC), P.H. Glatfelter Company (NYSE:GLT), and National CineMedia, Inc. (NASDAQ:NCMI) to gather more data points.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to go over the latest hedge fund action surrounding Granite Point Mortgage Trust Inc. (NYSE:GPMT).
Hedge fund activity in Granite Point Mortgage Trust Inc. (NYSE:GPMT)
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, no change from the previous quarter. By comparison, 8 hedge funds held shares or bullish call options in GPMT heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Clough Capital Partners was the largest shareholder of Granite Point Mortgage Trust Inc. (NYSE:GPMT), with a stake worth $10.3 million reported as of the end of September. Trailing Clough Capital Partners was Renaissance Technologies, which amassed a stake valued at $5.5 million. Citadel Investment Group, PEAK6 Capital Management, and Tudor Investment Corp were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Granite Point Mortgage Trust Inc. (NYSE:GPMT) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of funds that decided to sell off their entire stakes in the third quarter. It’s worth mentioning that Israel Englander’s Millennium Management said goodbye to the largest investment of the 700 funds watched by Insider Monkey, comprising an estimated $2.5 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dumped its stock, about $1.2 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Granite Point Mortgage Trust Inc. (NYSE:GPMT). We will take a look at TCP Capital Corp (NASDAQ:TCPC), P.H. Glatfelter Company (NYSE:GLT), National CineMedia, Inc. (NASDAQ:NCMI), and BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX). All of these stocks’ market caps resemble GPMT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TCPC | 10 | 19293 | 1 |
| GLT | 4 | 11422 | 0 |
| NCMI | 15 | 45676 | 1 |
| BCRX | 20 | 345445 | 5 |
| Average | 12.25 | 105459 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $21 million in GPMT’s case. BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) is the most popular stock in this table. On the other hand P.H. Glatfelter Company (NYSE:GLT) is the least popular one with only 4 bullish hedge fund positions. Granite Point Mortgage Trust Inc. (NYSE:GPMT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BCRX might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
