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Hedge Funds Are Dumping Ellington Financial LLC (EFC)

How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Ellington Financial LLC (NYSE:EFC).

Ellington Financial LLC (NYSE:EFC) shareholders have witnessed a decrease in support from the world’s most elite money managers lately. Ellington Financial LLC (NYSE:EFC) was in 6 hedge funds’ portfolios at the end of the third quarter of 2015. There were 7 hedge funds in our database with Ellington Financial LLC (NYSE:EFC) positions at the end of the previous quarter. At the end of this article, we will also compare Ellington Financial LLC (NYSE:EFC) to other stocks, including Capella Education Company (NASDAQ:CPLA), Aegion Corp – Class A (NASDAQ:AEGN), and PGT, Inc. (NASDAQ:PGTI) to get a better sense of its popularity.

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According to most stock holders, hedge funds are seen as unimportant, outdated investment vehicles of the past. While there are over 8000 funds trading at the moment, our researchers choose to focus on the leaders of this group, around 700 funds. These hedge fund managers watch over most of the smart money’s total asset base, and by shadowing their matchless picks, Insider Monkey has formulated a few investment strategies that have historically defeated the broader indices. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.

With all of this in mind, let’s take a look at the new action surrounding Ellington Financial LLC (NYSE:EFC).

Hedge fund activity in Ellington Financial LLC (NYSE:EFC)

At the end of Q3, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 14% from the second quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Ellington, managed by Mike Vranos, holds the largest position in Ellington Financial LLC (NYSE:EFC). Ellington has a $36.4 million position in the stock, comprising 9.7% of its 13F portfolio. On Ellington’s heels is Omega Advisors, managed by Leon Cooperman, which holds an $18.3 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish include Emanuel J. Friedman’s EJF Capital, Carl Goldsmith and Scott Klein’s Beach Point Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.

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