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Here’s About Hedge Funds Think About Chimera Investment Corporation (CIM)

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Chimera Investment Corporation (NYSE:CIM).

Chimera Investment Corporation (NYSE:CIM) has seen a decrease in support from the world’s most elite money managers of late. Our calculations also showed that cim isn’t among the 30 most popular stocks among hedge funds.

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 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

OMEGA ADVISORS

Let’s analyze the latest hedge fund action regarding Chimera Investment Corporation (NYSE:CIM).

What does the smart money think about Chimera Investment Corporation (NYSE:CIM)?

Heading into the first quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in CIM a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

No of Hedge Funds With CIM Positions

Among these funds, Renaissance Technologies held the most valuable stake in Chimera Investment Corporation (NYSE:CIM), which was worth $22 million at the end of the third quarter. On the second spot was PEAK6 Capital Management which amassed $2.9 million worth of shares. Moreover, Millennium Management, Holocene Advisors, and Omega Advisors were also bullish on Chimera Investment Corporation (NYSE:CIM), allocating a large percentage of their portfolios to this stock.

Because Chimera Investment Corporation (NYSE:CIM) has faced falling interest from hedge fund managers, logic holds that there lies a certain “tier” of funds that slashed their full holdings heading into Q3. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the largest position of all the hedgies monitored by Insider Monkey, comprising an estimated $0.3 million in stock, and Benjamin A. Smith’s Laurion Capital Management was right behind this move, as the fund sold off about $0.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds heading into Q3.

Let’s now review hedge fund activity in other stocks similar to Chimera Investment Corporation (NYSE:CIM). These stocks are Lions Gate Entertainment Corporation (NYSE:LGF-A), Lions Gate Entertainment Corporation (NYSE:LGF-B), GrafTech International Ltd. (NYSE:EAF), and Stericycle Inc (NASDAQ:SRCL). All of these stocks’ market caps match CIM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LGF-A 21 339702 4
LGF-B 19 299330 5
EAF 23 108746 -8
SRCL 19 273799 -1
Average 20.5 255394 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $255 million. That figure was $30 million in CIM’s case. GrafTech International Ltd. (NYSE:EAF) is the most popular stock in this table. On the other hand Lions Gate Entertainment Corporation (NYSE:LGF-B) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Chimera Investment Corporation (NYSE:CIM) is even less popular than LGF-B. Hedge funds dodged a bullet by taking a bearish stance towards CIM. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately CIM wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); CIM investors were disappointed as the stock returned 8.8% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

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