It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Anworth Mortgage Asset Corporation (NYSE:ANH).
Anworth Mortgage Asset Corporation (NYSE:ANH) shareholders have witnessed an increase in hedge fund interest in recent months. There were 15 hedge funds in our database with ANH positions at the end of the third quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as The Hackett Group, Inc. (NASDAQ:HCKT), American Vanguard Corp. (NYSE:AVD), and State National Companies Inc (NASDAQ:SNC) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, let’s take a glance at the latest action surrounding Anworth Mortgage Asset Corporation (NYSE:ANH).
What have hedge funds been doing with Anworth Mortgage Asset Corporation (NYSE:ANH)?
Heading into the fourth quarter of 2016, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, up 15% from the second quarter of 2016. By comparison, 14 hedge funds held shares or bullish call options in ANH heading into this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Jim Simons’ Renaissance Technologies has the largest position in Anworth Mortgage Asset Corporation (NYSE:ANH), worth close to $13.9 million. On Renaissance Technologies’s heels is Nathaniel August of Mangrove Partners, with a $5 million position; 1.2% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Anand Parekh’s Alyeska Investment Group, Israel Englander’s Millennium Management and Gregg Moskowitz’s Interval Partners. We should note that Mangrove Partners is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As one would reasonably expect, key money managers were leading the bulls’ herd. Alyeska Investment Group initiated the biggest position in Anworth Mortgage Asset Corporation (NYSE:ANH). According to regulatory filings, the fund had $3.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.6 million position during the quarter. The following funds were also among the new ANH investors: Brian Taylor’s Pine River Capital Management and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s now review hedge fund activity in other stocks similar to Anworth Mortgage Asset Corporation (NYSE:ANH). These stocks are The Hackett Group, Inc. (NASDAQ:HCKT), American Vanguard Corp. (NYSE:AVD), State National Companies Inc (NASDAQ:SNC), and Westwood Holdings Group, Inc. (NYSE:WHG). This group of stocks’ market caps are similar to ANH’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $30 million in ANH’s case. The Hackett Group, Inc. (NASDAQ:HCKT) is the most popular stock in this table. On the other hand Westwood Holdings Group, Inc. (NYSE:WHG) is the least popular one with only 5 bullish hedge fund positions. Anworth Mortgage Asset Corporation (NYSE:ANH) 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 HCKT might be a better candidate to consider taking a long position in.