The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded IMPAC Mortgage Holdings, Inc (NYSE:IMH) based on those filings.
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. At the end of this article we will also compare IMH to other stocks including IF Bancorp Inc (NASDAQ:IROQ), Oncolytics Biotech, Inc. (NASDAQ:ONCY), and Retractable Technologies, Inc. (NYSE:RVP) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the key hedge fund action surrounding IMPAC Mortgage Holdings, Inc (NYSE:IMH).
How have hedgies been trading IMPAC Mortgage Holdings, Inc (NYSE:IMH)?
At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2019. On the other hand, there were a total of 2 hedge funds with a bullish position in IMH a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Israel Englander’s Millennium Management has the largest position in IMPAC Mortgage Holdings, Inc (NYSE:IMH), worth close to $0.2 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is Ellington, led by Mike Vranos, holding a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish encompass Renaissance Technologies, Paul Tudor Jones’s Tudor Investment Corp and . In terms of the portfolio weights assigned to each position Ellington allocated the biggest weight to IMPAC Mortgage Holdings, Inc (NYSE:IMH), around 0.03% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, designating 0.0022 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 similar to IMPAC Mortgage Holdings, Inc (NYSE:IMH). These stocks are IF Bancorp Inc (NASDAQ:IROQ), Oncolytics Biotech, Inc. (NASDAQ:ONCY), Retractable Technologies, Inc. (NYSE:RVP), and Capitala Finance Corp (NASDAQ:CPTA). All of these stocks’ market caps match IMH’s market cap.
|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 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. Capitala Finance Corp (NASDAQ:CPTA) is the most popular stock in this table. On the other hand IF Bancorp Inc (NASDAQ:IROQ) is the least popular one with only 1 bullish hedge fund positions. IMPAC Mortgage Holdings, Inc (NYSE:IMH) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately IMH wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on IMH were disappointed as the stock returned -34.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.