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

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Cherry Hill Mortgage Investment Corp (NYSE:CHMI).

Cherry Hill Mortgage Investment Corp (NYSE:CHMI) was in 7 hedge funds’ portfolios at the end of the first quarter of 2020. CHMI investors should pay attention to a decrease in activity from the world’s largest hedge funds of late. There were 9 hedge funds in our database with CHMI holdings at the end of the previous quarter. Our calculations also showed that CHMI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are tons of metrics investors put to use to analyze their stock investments. A duo of the most innovative metrics are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best money managers can outpace their index-focused peers by a significant margin (see the details here).

David Harding

David Harding of Winton Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a gander at the recent hedge fund action surrounding Cherry Hill Mortgage Investment Corp (NYSE:CHMI).

What have hedge funds been doing with Cherry Hill Mortgage Investment Corp (NYSE:CHMI)?

Heading into the second quarter of 2020, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in CHMI a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is CHMI A Good Stock To Buy?

The largest stake in Cherry Hill Mortgage Investment Corp (NYSE:CHMI) was held by Renaissance Technologies, which reported holding $6.5 million worth of stock at the end of September. It was followed by Winton Capital Management with a $1.2 million position. Other investors bullish on the company included Citadel Investment Group, Arrowstreet Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Almitas Capital allocated the biggest weight to Cherry Hill Mortgage Investment Corp (NYSE:CHMI), around 0.25% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.03 percent of its 13F equity portfolio to CHMI.

Because Cherry Hill Mortgage Investment Corp (NYSE:CHMI) has experienced declining sentiment from hedge fund managers, it’s safe to say that there is a sect of fund managers that elected to cut their full holdings heading into Q4. At the top of the heap, Michael Gelband’s ExodusPoint Capital said goodbye to the biggest stake of the “upper crust” of funds monitored by Insider Monkey, totaling close to $0.6 million in stock, and Minhua Zhang’s Weld Capital Management was right behind this move, as the fund cut about $0.3 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Cherry Hill Mortgage Investment Corp (NYSE:CHMI). These stocks are OneWater Marine Inc. (NASDAQ:ONEW), Uranium Energy Corp. (NYSE:UEC), Strongbridge Biopharma plc (NASDAQ:SBBP), and Sierra Oncology, Inc. (NASDAQ:SRRA). This group of stocks’ market values are closest to CHMI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ONEW 6 10723 6
UEC 6 2089 -1
SBBP 10 12910 1
SRRA 9 42852 0
Average 7.75 17144 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $10 million in CHMI’s case. Strongbridge Biopharma plc (NASDAQ:SBBP) is the most popular stock in this table. On the other hand OneWater Marine Inc. (NASDAQ:ONEW) is the least popular one with only 6 bullish hedge fund positions. Cherry Hill Mortgage Investment Corp (NYSE:CHMI) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on CHMI as the stock returned 56.6% during the second quarter and outperformed the market by an even larger margin.

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