In this article you are going to find out whether hedge funds think IMPAC Mortgage Holdings, Inc (NYSE:IMH) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Hedge fund interest in IMPAC Mortgage Holdings, Inc (NYSE:IMH) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that IMH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare IMH to other stocks including Avinger Inc (NASDAQ:AVGR), Jewett-Cameron Trading Co Ltd. (NASDAQ:JCTCF), and Sotherly Hotels Inc (NASDAQ:SOHO) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s take a gander at the recent hedge fund action regarding IMPAC Mortgage Holdings, Inc (NYSE:IMH).
Hedge fund activity in IMPAC Mortgage Holdings, Inc (NYSE:IMH)
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. On the other hand, there were a total of 5 hedge funds with a bullish position in IMH a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in IMPAC Mortgage Holdings, Inc (NYSE:IMH), which was worth $0.1 million at the end of the third quarter. On the second spot was Ellington which amassed $0.1 million worth of shares. Millennium Management, Citadel Investment Group, and Tudor Investment Corp were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ellington allocated the biggest weight to IMPAC Mortgage Holdings, Inc (NYSE:IMH), around 0.02% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, designating 0.0006 percent of its 13F equity portfolio to IMH.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as IMPAC Mortgage Holdings, Inc (NYSE:IMH) but similarly valued. We will take a look at Avinger Inc (NASDAQ:AVGR), Jewett-Cameron Trading Co Ltd. (NASDAQ:JCTCF), Sotherly Hotels Inc (NASDAQ:SOHO), ToughBuilt Industries, Inc. (NASDAQ:TBLT), Data I/O Corporation (NASDAQ:DAIO), BIO-key International, Inc. (NASDAQ:BKYI), and Hoth Therapeutics, Inc. (NASDAQ:HOTH). This group of stocks’ market values match IMH’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.1 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $0 million in IMH’s case. ToughBuilt Industries, Inc. (NASDAQ:TBLT) is the most popular stock in this table. On the other hand Jewett-Cameron Trading Co Ltd. (NASDAQ:JCTCF) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks IMPAC Mortgage Holdings, Inc (NYSE:IMH) is more popular among hedge funds. Our overall hedge fund sentiment score for IMH is 71.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 30.7% in 2020 through November 27th but still managed to beat the market by 16.1 percentage points. Hedge funds were also right about betting on IMH as the stock returned 45.7% since the end of September (through 11/27) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.