There are several ways to beat the market, and investing in small-cap stocks has historically been one of them. We like to improve our odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small-cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small-cap picks. In this article, we use hedge fund filing data to analyze Invesco Mortgage Capital Inc (NYSE:IVR).
Invesco Mortgage Capital Inc (NYSE:IVR) was in 13 hedge funds’ portfolios at the end of September. Invesco Mortgage Capital Inc (NYSE:IVR) has experienced a decrease in enthusiasm from smart money recently. There were 14 hedge funds in our database with Invesco Mortgage Capital Inc (NYSE:IVR) positions at the end of the previous 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 Applied Industrial Technologies (NYSE:AIT), Core-Mark Holding Company, Inc. (NASDAQ:CORE), and Sabra Health Care REIT Inc (NASDAQ:SBRA) to gather more data points.
In the eyes of most investors, hedge funds are perceived as unimportant, outdated financial tools of years past. While there are more than 8,000 funds with their doors open at the moment, experts at hedge fund tracking site Insider Monkey choose to focus on the bigwigs of this club, approximately 700 funds. Most estimates calculate that this group of people manage most of all hedge funds’ total asset base, and by paying attention to their best investments, Insider Monkey has deciphered many investment strategies that have historically outrun the market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points annually for a decade in its backtests.
Keeping this in mind, we’re going to take a peek at the latest action regarding Invesco Mortgage Capital Inc (NYSE:IVR).
How have hedgies been trading Invesco Mortgage Capital Inc (NYSE:IVR)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long in this stock, a decline of 7% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Balyasny Asset Management, managed by Dmitry Balyasny, holds the biggest position in Invesco Mortgage Capital Inc (NYSE:IVR). Balyasny Asset Management has a $43.3 million position in the stock, comprising 0.3% of its 13F portfolio. The second-largest stake is held by Mangrove Partners, managed by Nathaniel August, which holds a $20.1 million position; the fund has 4.6% of its 13F portfolio invested in the stock. Remaining peers that are bullish encompass Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management, and Andy Redleaf’s Whitebox Advisors.
Due to the fact that Invesco Mortgage Capital Inc (NYSE:IVR) has faced falling interest from the smart money, it’s safe to say that there were a few hedgies that elected to cut their positions entirely in the third quarter. Interestingly, Chao Ku’s Nine Chapters Capital Management sold off the biggest stake of all the hedgies monitored by Insider Monkey, valued at an estimated $2.7 million in stock. Jim Simons’ fund, Renaissance Technologies, also dumped its stock, about $1.2 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by one fund in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Invesco Mortgage Capital Inc (NYSE:IVR). These stocks are Applied Industrial Technologies (NYSE:AIT), Core-Mark Holding Company, Inc. (NASDAQ:CORE), Sabra Health Care REIT Inc (NASDAQ:SBRA), and Compania de Minas Buenaventura SA (ADR) (NYSE:BVN). This group of stocks’ market caps are similar to Invesco Mortgage Capital Inc (NYSE:IVR)’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 nine hedge funds with bullish positions and the average amount invested in these stocks was $80 million, right in line with the amount invested in Invesco Mortgage. Applied Industrial Technologies (NYSE:AIT) is the most popular stock in this table. On the other hand Compania de Minas Buenaventura SA (ADR) (NYSE:BVN) is the least popular one with only seven bullish hedge fund positions. Compared to these stocks Invesco Mortgage Capital Inc (NYSE:IVR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.