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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 Ellington Financial Inc. (NYSE:EFC).
Is Ellington Financial Inc. (NYSE:EFC) a buy right now? Prominent investors were buying. The number of long hedge fund positions inched up by 3 lately. Ellington Financial Inc. (NYSE:EFC) was in 11 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 12. Our calculations also showed that EFC 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). There were 8 hedge funds in our database with EFC holdings at the end of June.
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.
Leon Cooperman of Omega Advisors
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. Now we're going to analyze the latest hedge fund action regarding Ellington Financial Inc. (NYSE:EFC).
Do Hedge Funds Think EFC Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in EFC a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Ellington was the largest shareholder of Ellington Financial Inc. (NYSE:EFC), with a stake worth $10.4 million reported as of the end of September. Trailing Ellington was Omega Advisors, which amassed a stake valued at $9.3 million. Kingstown Capital Management, Millennium Management, and Citadel Investment Group 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 Kingstown Capital Management allocated the biggest weight to Ellington Financial Inc. (NYSE:EFC), around 3.77% of its 13F portfolio. Ellington is also relatively very bullish on the stock, setting aside 3.64 percent of its 13F equity portfolio to EFC.
Now, key hedge funds were breaking ground themselves. Renaissance Technologies, established the biggest position in Ellington Financial Inc. (NYSE:EFC). Renaissance Technologies had $1.7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $1 million position during the quarter. The following funds were also among the new EFC investors: Matthew Hulsizer's PEAK6 Capital Management and Donald Sussman's Paloma Partners.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Ellington Financial Inc. (NYSE:EFC) but similarly valued. We will take a look at SIGA Technologies Inc. (NASDAQ:SIGA), Turning Point Brands, Inc. (NYSE:TPB), BlackRock Resources & Commodities Strategy Trust (NYSE:BCX), Patterson-UTI Energy, Inc. (NASDAQ:PTEN), Brainstorm Cell Therapeutics Inc. (NASDAQ:BCLI), Intersect ENT Inc (NASDAQ:XENT), and Marine Products Corp. (NYSE:MPX). This group of stocks' market valuations are similar to EFC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SIGA,16,52498,5 TPB,24,98061,12 BCX,6,2745,1 PTEN,22,83691,-4 BCLI,3,2213,-3 XENT,17,109447,0 MPX,5,15370,0 Average,13.3,52004,1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $38 million in EFC's case. Turning Point Brands, Inc. (NYSE:TPB) is the most popular stock in this table. On the other hand Brainstorm Cell Therapeutics Inc. (NASDAQ:BCLI) is the least popular one with only 3 bullish hedge fund positions. Ellington Financial Inc. (NYSE:EFC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EFC is 54.5. 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. A small number of hedge funds were also right about betting on EFC as the stock returned 24.1% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
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