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Hedge Funds Nibbling On Hunt Companies Finance Trust, Inc. (HCFT)

Debasis Saha

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Hunt Companies Finance Trust, Inc. (NYSE:HCFT) based on that data.

Hunt Companies Finance Trust, Inc. (NYSE:HCFT) has experienced an increase in activity from the world's largest hedge funds lately. HCFT was in 5 hedge funds' portfolios at the end of March. There were 4 hedge funds in our database with HCFT holdings at the end of the previous quarter. Our calculations also showed that HCFT isn't among the 30 most popular stocks among hedge funds (click for Q1 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_27480" align="aligncenter" width="400"] Israel Englander of Millennium Management[/caption]

Izzy Englander of MILLENNIUM MANAGEMENT

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 peek at the key hedge fund action regarding Hunt Companies Finance Trust, Inc. (NYSE:HCFT).

How are hedge funds trading Hunt Companies Finance Trust, Inc. (NYSE:HCFT)?

Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in HCFT over the last 18 quarters. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Is HCFT A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ron Mass's Almitas Capital has the largest position in Hunt Companies Finance Trust, Inc. (NYSE:HCFT), worth close to $0.6 million, accounting for 1.3% of its total 13F portfolio. The second largest stake is held by Mike Vranos of Ellington, with a $0.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish contain  Renaissance Technologies, Carl Goldsmith and Scott Klein's Beach Point Capital Management and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Almitas Capital allocated the biggest weight to Hunt Companies Finance Trust, Inc. (NYSE:HCFT), around 1.27% of its 13F portfolio. Ellington is also relatively very bullish on the stock, dishing out 0.12 percent of its 13F equity portfolio to HCFT.

As industrywide interest jumped, specific money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the most valuable position in Hunt Companies Finance Trust, Inc. (NYSE:HCFT). Millennium Management had $0 million invested in the company at the end of the quarter.

Let's now take a look at hedge fund activity in other stocks similar to Hunt Companies Finance Trust, Inc. (NYSE:HCFT). These stocks are Cyren Ltd (NASDAQ:CYRN), Yatra Online, Inc. (NASDAQ:YTRA), Gulf Island Fabrication, Inc. (NASDAQ:GIFI), and Ocean Bio-Chem, Inc. (NASDAQ:OBCI). All of these stocks' market caps match HCFT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CYRN,2,897,0 YTRA,9,13292,1 GIFI,8,5351,-2 OBCI,1,575,0 Average,5,5029,-0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $1 million in HCFT's case. Yatra Online, Inc. (NASDAQ:YTRA) is the most popular stock in this table. On the other hand Ocean Bio-Chem, Inc. (NASDAQ:OBCI) is the least popular one with only 1 bullish hedge fund positions. Hunt Companies Finance Trust, Inc. (NYSE:HCFT) is not the least popular stock in this group but hedge fund interest is still below average. 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 and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on HCFT as the stock returned 24.3% during the second quarter 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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