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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 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about Lument Finance Trust, Inc. (NYSE:LFT)?
Is LFT a good stock to buy? Hedge fund interest in Lument Finance Trust, Inc. (NYSE:LFT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that LFT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare LFT to other stocks including CSI Compressco LP (NASDAQ:CCLP), Synacor Inc (NASDAQ:SYNC), and Recro Pharma Inc (NASDAQ:REPH) to get a better sense of its popularity.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we're going to review the fresh hedge fund action surrounding Lument Finance Trust, Inc. (NYSE:LFT).
Do Hedge Funds Think LFT Is A Good Stock To Buy Now?
At the end of March, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in LFT 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.
More specifically, Centiva Capital was the largest shareholder of Lument Finance Trust, Inc. (NYSE:LFT), with a stake worth $0.9 million reported as of the end of March. Trailing Centiva Capital was Renaissance Technologies, which amassed a stake valued at $0.9 million. Ellington, Millennium Management, and Arrowstreet Capital 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 Ellington allocated the biggest weight to Lument Finance Trust, Inc. (NYSE:LFT), around 0.08% of its 13F portfolio. Centiva Capital is also relatively very bullish on the stock, designating 0.03 percent of its 13F equity portfolio to LFT.
Since Lument Finance Trust, Inc. (NYSE:LFT) has faced falling interest from the smart money, it's safe to say that there exists a select few funds that elected to cut their positions entirely in the first quarter. Interestingly, Ron Mass's Almitas Capital dumped the largest position of all the hedgies tracked by Insider Monkey, worth about $1 million in stock. Ken Griffin's fund, Citadel Investment Group, also dumped its stock, about $0.1 million worth. These transactions are intriguing to say the least, 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 Lument Finance Trust, Inc. (NYSE:LFT) but similarly valued. These stocks are CSI Compressco LP (NASDAQ:CCLP), Synacor Inc (NASDAQ:SYNC), Recro Pharma Inc (NASDAQ:REPH), Stealth BioTherapeutics Corp (NASDAQ:MITO), Lake Shore Bancorp, Inc. (NASDAQ:LSBK), Avalon GloboCare Corp. (NASDAQ:AVCO), and Charles & Colvard, Ltd. (NASDAQ:CTHR). This group of stocks' market values resemble LFT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CCLP,3,1210,0 SYNC,7,10133,3 REPH,15,22196,2 MITO,4,3271,1 LSBK,1,294,0 AVCO,2,574,1 CTHR,4,8264,2 Average,5.1,6563,1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $3 million in LFT's case. Recro Pharma Inc (NASDAQ:REPH) is the most popular stock in this table. On the other hand Lake Shore Bancorp, Inc. (NASDAQ:LSBK) is the least popular one with only 1 bullish hedge fund positions. Lument Finance Trust, Inc. (NYSE:LFT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LFT is 49.3. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. A small number of hedge funds were also right about betting on LFT as the stock returned 20.1% since the end of the first quarter (through 6/18) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.