PennyMac Mortgage Investment Trust (PMT): Hedge Funds Are Bearish and Insiders Are Undecided, What Should You Do?

Page 1 of 2

In the 21st century investor’s toolkit, there are dozens of metrics market participants can use to analyze Mr. Market. A duo of the best are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top hedge fund managers can outclass the broader indices by a healthy margin (see just how much).

Equally as key, positive insider trading activity is a second way to analyze the investments you’re interested in. As the old adage goes: there are many motivations for an executive to downsize shares of his or her company, but just one, very obvious reason why they would buy. Several empirical studies have demonstrated the valuable potential of this method if shareholders know where to look (learn more here).

PennyMac Mortgage Investment Trust (NYSE:PMT)

Now that that’s out of the way, let’s examine the recent info for PennyMac Mortgage Investment Trust (NYSE:PMT).

How have hedgies been trading PennyMac Mortgage Investment Trust (NYSE:PMT)?

At Q2’s end, a total of 15 of the hedge funds we track were long in this stock, a change of -6% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially.

According to our 13F database, Highbridge Capital Management, managed by Glenn Russell Dubin, holds the most valuable position in PennyMac Mortgage Investment Trust (NYSE:PMT). Highbridge Capital Management has a $43.5 million position in the stock, comprising 0.4% of its 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $18.3 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedgies that are bullish include John Khoury’s Long Pond Capital, Jonathon Jacobson’s Highfields Capital Management and Chuck Royce’s Royce & Associates.

As PennyMac Mortgage Investment Trust (NYSE:PMT) has faced a fall in interest from upper-tier hedge fund managers, it’s easy to see that there lies a certain “tier” of fund managers that decided to sell off their positions entirely last quarter. At the top of the heap, John Burbank’s Passport Capital said goodbye to the largest position of the “upper crust” of funds we watch, valued at an estimated $53 million in stock, and Jim Simons of Renaissance Technologies was right behind this move, as the fund said goodbye to about $17.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds last quarter.

Insider trading activity in PennyMac Mortgage Investment Trust (NYSE:PMT)

Insider buying is most useful when the company we’re looking at has experienced transactions within the past six months. Over the latest half-year time frame, PennyMac Mortgage Investment Trust (NYSE:PMT) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to PennyMac Mortgage Investment Trust (NYSE:PMT). These stocks are ARMOUR Residential REIT, Inc. (NYSE:ARR), CYS Investments Inc (NYSE:CYS), Colonial Properties Trust Inc (NYSE:CLP), Education Realty Trust, Inc. (NYSE:EDR), and Sun Communities Inc (NYSE:SUI). All of these stocks are in the reit – residential industry and their market caps are similar to PMT’s market cap.

Page 1 of 2