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Hedge Funds Are Dumping Cherry Hill Mortgage Investment Corp (CHMI)

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Two Sigma Advisors. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically, a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case here because none of the 700+ hedge funds tracked by Insider Monkey identified Cherry Hill Mortgage Investment Corp (NYSE:CHMI) as a viable investment and initiated a position in the stock.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cherry Hill Mortgage Investment Corp (NYSE:CHMI) but similarly valued. These stocks are, Ampco-Pittsburgh Corp. (NYSE:AP), Rex Energy Corporation (NASDAQ:REXX), and Entegra Financial Corp (NASDAQ:ENFC). This group of stocks’ market values resemble Cherry Hill Mortgage Investment Corp (NYSE:CHMI)’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AP 7 22562 1
REXX 5 2708 -2
ENFC 4 13419 -1

As you can see, these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $11 million in Cherry Hill Mortgage Investment Corp (NYSE:CHMI)’s case. Ampco-Pittsburgh Corp. (NYSE:AP) is the most popular stock in this table. On the other hand, Entegra Financial Corp (NASDAQ:ENFC) is the least popular one with only 4 bullish hedge fund positions. Cherry Hill Mortgage Investment Corp (NYSE:CHMI) 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, Ampco-Pittsburgh Corp. (NYSE:AP) might be a better candidate to consider a long position.

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