Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter of 2018. Trends reversed 180 degrees in 2019 amid Powell's pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the third quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards New York Mortgage Trust, Inc. (NASDAQ:NYMT).
New York Mortgage Trust, Inc. (NASDAQ:NYMT) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds' portfolios at the end of September. At the end of this article we will also compare NYMT to other stocks including MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI), Atkore International Group Inc. (NYSE:ATKR), and The RMR Group Inc. (NASDAQ:RMR) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are numerous signals stock market investors can use to assess publicly traded companies. A duo of the best signals are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the elite fund managers can beat the broader indices by a healthy amount (see the details here).
[caption id="attachment_189632" align="aligncenter" width="450"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's go over the key hedge fund action surrounding New York Mortgage Trust, Inc. (NASDAQ:NYMT).
How are hedge funds trading New York Mortgage Trust, Inc. (NASDAQ:NYMT)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. By comparison, 7 hedge funds held shares or bullish call options in NYMT a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in New York Mortgage Trust, Inc. (NASDAQ:NYMT), which was worth $9.5 million at the end of the third quarter. On the second spot was Winton Capital Management which amassed $7.9 million worth of shares. Balyasny Asset Management, Citadel Investment Group, and Millennium Management 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 Winton Capital Management allocated the biggest weight to New York Mortgage Trust, Inc. (NASDAQ:NYMT), around 0.09% of its 13F portfolio. Balyasny Asset Management is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to NYMT.
Seeing as New York Mortgage Trust, Inc. (NASDAQ:NYMT) has witnessed bearish sentiment from the aggregate hedge fund industry, it's easy to see that there were a few hedge funds that elected to cut their positions entirely last quarter. Interestingly, Jeffrey Talpins's Element Capital Management sold off the biggest position of the 750 funds followed by Insider Monkey, totaling close to $1.3 million in stock. Roger Ibbotson's fund, Zebra Capital Management, also sold off its stock, about $0.1 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as New York Mortgage Trust, Inc. (NASDAQ:NYMT) but similarly valued. We will take a look at MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI), Atkore International Group Inc. (NYSE:ATKR), The RMR Group Inc. (NASDAQ:RMR), and The Liberty Braves Group (NASDAQ:BATRK). All of these stocks' market caps resemble NYMT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MTSI,14,197407,-3 ATKR,19,104150,2 RMR,20,186711,-2 BATRK,22,318173,-1 Average,18.75,201610,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $202 million. That figure was $26 million in NYMT's case. The Liberty Braves Group (NASDAQ:BATRK) is the most popular stock in this table. On the other hand MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks New York Mortgage Trust, Inc. (NASDAQ:NYMT) is even less popular than MTSI. Hedge funds dodged a bullet by taking a bearish stance towards NYMT. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately NYMT wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NYMT investors were disappointed as the stock returned 2.3% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.