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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of MFA Financial, Inc. (NYSE:MFA).
Is MFA Financial, Inc. (NYSE:MFA) worth your attention right now? Hedge funds were reducing their bets on the stock. The number of long hedge fund positions were cut by 6 in recent months. MFA Financial, Inc. (NYSE:MFA) was in 16 hedge funds' portfolios at the end of March. The all time high for this statistic is 22. Our calculations also showed that MFA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 22 hedge funds in our database with MFA positions at the end of the fourth quarter.
To most stock holders, hedge funds are assumed to be worthless, old investment vehicles of yesteryear. While there are more than 8000 funds with their doors open at present, Our researchers choose to focus on the top tier of this club, around 850 funds. Most estimates calculate that this group of people have their hands on the majority of all hedge funds' total asset base, and by paying attention to their highest performing picks, Insider Monkey has unsheathed various investment strategies that have historically exceeded the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
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Do Hedge Funds Think MFA Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -27% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in MFA a year ago. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Two Sigma Advisors was the largest shareholder of MFA Financial, Inc. (NYSE:MFA), with a stake worth $20.7 million reported as of the end of March. Trailing Two Sigma Advisors was Arrowstreet Capital, which amassed a stake valued at $18.5 million. Renaissance Technologies, Millennium Management, and Beach Point 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 Beach Point Capital Management allocated the biggest weight to MFA Financial, Inc. (NYSE:MFA), around 2.81% of its 13F portfolio. Gratia Capital is also relatively very bullish on the stock, setting aside 1.05 percent of its 13F equity portfolio to MFA.
Judging by the fact that MFA Financial, Inc. (NYSE:MFA) has experienced a decline in interest from hedge fund managers, it's safe to say that there were a few hedgies that slashed their full holdings heading into Q2. It's worth mentioning that Ron Mass's Almitas Capital said goodbye to the largest investment of the "upper crust" of funds tracked by Insider Monkey, worth an estimated $12.7 million in stock. Ron Mass's fund, Almitas Capital, also dumped its stock, about $1.5 million worth. These transactions are interesting, as total hedge fund interest fell by 6 funds heading into Q2.
Let's now review hedge fund activity in other stocks similar to MFA Financial, Inc. (NYSE:MFA). We will take a look at Capitol Federal Financial, Inc. (NASDAQ:CFFN), SiTime Corporation (NASDAQ:SITM), Granite Construction Incorporated (NYSE:GVA), Newmark Group, Inc. (NASDAQ:NMRK), Northwest Bancshares, Inc. (NASDAQ:NWBI), CorVel Corporation (NASDAQ:CRVL), and Covanta Holding Corporation (NYSE:CVA). This group of stocks' market values match MFA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CFFN,12,89757,2 SITM,20,156794,9 GVA,13,29407,2 NMRK,21,193761,-1 NWBI,14,32740,5 CRVL,10,115115,-3 CVA,21,180517,0 Average,15.9,114013,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.9 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $104 million in MFA's case. Newmark Group, Inc. (NASDAQ:NMRK) is the most popular stock in this table. On the other hand CorVel Corporation (NASDAQ:CRVL) is the least popular one with only 10 bullish hedge fund positions. MFA Financial, Inc. (NYSE:MFA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MFA is 48.1. 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 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Hedge funds were also right about betting on MFA, though not to the same extent, as the stock returned 14.5% since Q1 (through July 23rd) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.