Annaly Capital Management, Inc. (NLY) Is Making a You-Know-What Out Of These Investors

Down more than 20% year-to-date, Annaly Capital Management, Inc. (NYSE:NLY) hasn't exactly been friendly to any REIT-concious investor's portfolio. While it's tough to forecast what this volatile industry will do over the next 12-18 months, there's one way to see what the world's richest investors are doing.

In the eyes of most traders, hedge funds are assumed to be slow, outdated financial tools of yesteryear; we at Insider Monkey hone in on the elite of this group, close to 450 funds. It is estimated that this group controls the lion's share of the hedge fund industry's total asset base, and by watching their best picks, we have come up with a number of investment strategies that have historically outstripped the S&P 500 index.

Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (check out a sample of our picks).

Equally as beneficial, positive insider trading sentiment is another way to break down the world of equities. Just as you'd expect, there are lots of incentives for an upper level exec to downsize shares of his or her company, but just one, very clear reason why they would buy. Many academic studies have demonstrated the impressive potential of this strategy if shareholders understand what to do (learn more here).

Let's take a peek at the key action surrounding Annaly Capital Management, Inc. (NYSE:NLY).

What does the smart money think about Annaly Capital Management, Inc. (NYSE:NLY)?


At Q1's end, a total of 20 of the hedge funds we track held long positions in this stock, a change of -13% from the previous quarter. With hedgies' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings substantially.

Annaly Capital Management, Inc. (NYSE:NLY)

According to our comprehensive database, Charles de Vaulx's International Value Advisers had the most valuable position in Annaly Capital Management, Inc. (NYSE:NLY), worth close to $46.5 million, accounting for 1.2% of its total 13F portfolio. Sitting at the No. 2 spot is Pine River Capital Management, managed by Brian Taylor, which held a $44.3 million call position; 0.7% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, Cliff Asness's AQR Capital Management and Matthew Hulsizer's PEAK6 Capital Management.

Due to the fact that Annaly Capital Management, Inc. (NYSE:NLY) has faced declining sentiment from the smart money, logic holds that there lies a certain "tier" of hedge funds that elected to cut their entire stakes heading into Q2. It's worth mentioning that Brian Taylor's Pine River Capital Management sold off the largest investment of the "upper crust" of funds we monitor, valued at close to $49.6 million in stock, and Michael Lowenstein of Kensico Capital was right behind this move, as the fund dropped about $33.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 3 funds heading into Q2.

What have insiders been doing with Annaly Capital Management, Inc. (NYSE:NLY)?


Insider purchases made by high-level executives is best served when the company in focus has experienced transactions within the past 180 days. Over the last half-year time period, Annaly Capital Management, Inc. (NYSE:NLY) has experienced 2 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let's also examine hedge fund and insider activity in other stocks similar to Annaly Capital Management, Inc. (NYSE:NLY). These stocks are National Retail Properties, Inc. (NYSE:NNN), W.P. Carey Inc. REIT (NYSE:WPC), American Tower Corp (NYSE:AMT), Public Storage (NYSE:PSA), and Vornado Realty Trust (NYSE:VNO). This group of stocks are in the reit - diversified industry and their market caps match NLY's market cap.
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Company Name
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling

National Retail Properties, Inc. (NYSE:NNN)
16
0
5

W.P. Carey Inc. REIT (NYSE:WPC)
10
0
4

American Tower Corp (NYSE:AMT)
46
1
4

Public Storage (NYSE:PSA)
22
0
5

Vornado Realty Trust (NYSE:VNO)
17
1
2

With the results shown by the aforementioned time-tested strategies, everyday investors should always pay attention to hedge fund and insider trading sentiment, and Annaly Capital Management, Inc. (NYSE:NLY) is an important part of this process.

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