In this article we will check out the progression of hedge fund sentiment towards Federal Agricultural Mortgage Corp. (NYSE:AGM) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Federal Agricultural Mortgage Corp. (NYSE:AGM) has experienced a decrease in hedge fund interest of late. Our calculations also showed that AGM 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.
To the average investor there are dozens of tools stock traders can use to analyze publicly traded companies. A couple of the most under-the-radar tools are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top money managers can trounce the S&P 500 by a healthy amount (see the details here).
[caption id="attachment_738761" align="aligncenter" width="393"] Fred DiSanto of Ancora Advisors[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to analyze the recent hedge fund action encompassing Federal Agricultural Mortgage Corp. (NYSE:AGM).
How are hedge funds trading Federal Agricultural Mortgage Corp. (NYSE:AGM)?
At Q1's end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in AGM a year ago. So, let's check 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 Federal Agricultural Mortgage Corp. (NYSE:AGM), which was worth $13.5 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $2 million worth of shares. Millennium Management, Citadel Investment Group, and AQR Capital 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 Renaissance Technologies allocated the biggest weight to Federal Agricultural Mortgage Corp. (NYSE:AGM), around 0.01% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to AGM.
Since Federal Agricultural Mortgage Corp. (NYSE:AGM) has witnessed falling interest from hedge fund managers, it's easy to see that there lies a certain "tier" of funds that elected to cut their full holdings heading into Q4. Interestingly, D. E. Shaw's D E Shaw dumped the largest stake of the "upper crust" of funds monitored by Insider Monkey, comprising close to $0.5 million in stock. Matthew Hulsizer's fund, PEAK6 Capital Management, also cut its stock, about $0.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 1 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks similar to Federal Agricultural Mortgage Corp. (NYSE:AGM). We will take a look at Resideo Technologies, Inc. (NYSE:REZI), Boston Private Financial Hldg Inc (NASDAQ:BPFH), Seabridge Gold, Inc. (NYSE:SA), and Griffon Corporation (NYSE:GFF). This group of stocks' market caps resemble AGM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position REZI,25,151073,4 BPFH,14,36833,-2 SA,7,28075,1 GFF,13,73402,1 Average,14.75,72346,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $21 million in AGM's case. Resideo Technologies, Inc. (NYSE:REZI) is the most popular stock in this table. On the other hand Seabridge Gold, Inc. (NYSE:SA) is the least popular one with only 7 bullish hedge fund positions. Federal Agricultural Mortgage Corp. (NYSE:AGM) 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 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on AGM, though not to the same extent, as the stock returned 21.1% during the second quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.