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Hedge Funds Are Betting On Chimera Investment Corporation (CIM)

Is Chimera Investment Corporation (NYSE:CIM) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Chimera Investment Corporation (NYSE:CIM) investors should pay attention to an increase in hedge fund interest recently. Our calculations also showed that cim isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? 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.

Leon Cooperman Omega Advisors

We’re going to take a look at the latest hedge fund action encompassing Chimera Investment Corporation (NYSE:CIM).

Hedge fund activity in Chimera Investment Corporation (NYSE:CIM)

At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in CIM at the beginning of 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.

No of Hedge Funds with CIM Positions

More specifically, Renaissance Technologies was the largest shareholder of Chimera Investment Corporation (NYSE:CIM), with a stake worth $11.2 million reported as of the end of September. Trailing Renaissance Technologies was PEAK6 Capital Management, which amassed a stake valued at $3 million. Millennium Management, Holocene Advisors, and Omega Advisors were also very fond of the stock, giving the stock large weights in their portfolios.

As one would reasonably expect, key money managers were breaking ground themselves. Zebra Capital Management, managed by Roger Ibbotson, established the biggest position in Chimera Investment Corporation (NYSE:CIM). Zebra Capital Management had $0.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $0.3 million investment in the stock during the quarter. The following funds were also among the new CIM investors: Jeffrey Talpins’s Element Capital Management, Benjamin A. Smith’s Laurion Capital Management, and Frederick DiSanto’s Ancora Advisors.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Chimera Investment Corporation (NYSE:CIM) but similarly valued. These stocks are Domtar Corporation (NYSE:UFS), Vonage Holdings Corp. (NYSE:VG), The Boston Beer Company Inc (NYSE:SAM), and Kinross Gold Corporation (NYSE:KGC). This group of stocks’ market values are closest to CIM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UFS 22 231716 -3
VG 26 195159 7
SAM 14 264305 0
KGC 18 267341 -3
Average 20 239630 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $240 million. That figure was $17 million in CIM’s case. Vonage Holdings Corp. (NYSE:VG) is the most popular stock in this table. On the other hand The Boston Beer Company Inc (NYSE:SAM) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Chimera Investment Corporation (NYSE:CIM) is even less popular than SAM. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None. This article was originally published at Insider Monkey.

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