The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards Anworth Mortgage Asset Corporation (NYSE:ANH).
Anworth Mortgage Asset Corporation (NYSE:ANH) has seen a decrease in hedge fund interest in recent months. Anworth Mortgage Asset Corporation (NYSE:ANH) was in 11 hedge funds’ portfolios at the end of September. The all time high for this statistics is 15. There were 12 hedge funds in our database with ANH positions at the end of the second quarter. Our calculations also showed that ANH 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).
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 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 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 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. Keeping this in mind let’s take a glance at the new hedge fund action encompassing Anworth Mortgage Asset Corporation (NYSE:ANH).
Do Hedge Funds Think ANH Is A Good Stock To Buy Now?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ANH over the last 21 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Anworth Mortgage Asset Corporation (NYSE:ANH) was held by Renaissance Technologies, which reported holding $10 million worth of stock at the end of September. It was followed by Centiva Capital with a $4.7 million position. Other investors bullish on the company included Springhouse Capital Management, Almitas Capital, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Springhouse Capital Management allocated the biggest weight to Anworth Mortgage Asset Corporation (NYSE:ANH), around 6.24% of its 13F portfolio. Almitas Capital is also relatively very bullish on the stock, designating 1.99 percent of its 13F equity portfolio to ANH.
Because Anworth Mortgage Asset Corporation (NYSE:ANH) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedgies that elected to cut their entire stakes last quarter. Intriguingly, Mike Vranos’s Ellington dropped the largest stake of the “upper crust” of funds tracked by Insider Monkey, totaling close to $0.7 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund cut about $0 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Anworth Mortgage Asset Corporation (NYSE:ANH). These stocks are Green Plains Partners LP (NASDAQ:GPP), Northrim BanCorp, Inc. (NASDAQ:NRIM), Century Casinos, Inc. (NASDAQ:CNTY), Soliton, Inc. (NASDAQ:SOLY), Apyx Medical Corporation (NASDAQ:APYX), Glory Star New Media Group Holdings Limited (NASDAQ:GSMG), and Gencor Industries, Inc. (NASDAQ:GENC). This group of stocks’ market caps are closest to ANH’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 6.1 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $24 million in ANH’s case. Northrim BanCorp, Inc. (NASDAQ:NRIM) is the most popular stock in this table. On the other hand Soliton, Inc. (NASDAQ:SOLY) is the least popular one with only 1 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. Our overall hedge fund sentiment score for ANH is 76. 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 gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on ANH as the stock returned 55.5% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.