The Russell 2000 Index consists of the smallest 2,000 stocks in the Russell 3000 Index, and is thus referred to as a small-cap stock market index. It was established by the Frank Russell Company and is maintained by FTSE Russell, containing about 2,035 constituents as of January 2021. For investors looking to invest in small-cap stocks, the Russell 2000 Index can thus serve as a very useful and unique benchmark as compared to other indexes like the S&P 500 which focuses mainly on large-cap stocks. And while more established large-cap stocks like Netflix, Inc. (NASDAQ: NFLX), Alibaba Group Holding Limited (NYSE: BABA), Micron Technology, Inc. (NASDAQ: MU), and Twitter, Inc. (NYSE: TWTR) are by no means bad investment options, come 2021, investor circles began witnessing the slow but steady rise of small-cap stocks and the Russell 2000 Index in the face of, for instance, the S&P 500.

To back up the above claim, it has been reported by the Wall Street Journal that as of February 2021, investors have been more prone to pour money into smaller companies and cyclical stocks. This reality is one unseen in at least the last two decades, with investor confidence in the recovering economy and willingness to continue betting on small-cap stocks rising in light of vaccination distribution rates rising. As of this February, the Russell 2000 Index jumped by about 15%, for instance, setting 10 closing records at least until that point of the year and far surpassing the S&P 500 with its 4% rise. Another reason for smaller stocks managing to outperform their large-cap counterparts at least as far as this February, was also hinted to be investor expectations that the Biden administration would be offering greater fiscal spending.

As such, companies within the Russell 2000 Index have been gaining so far this year. An example is Plug Power Inc. (NASDAQ: PLUG), a hydrogen fuel-cell company. This stock, along with a couple others on the small-cap index, managed to gain at least 35% by February 2021. It has also performed impressively in the second quarter of 2021, reporting a revenue of 124.56 million, up 82.98% year over year and beating estimates by about $13.35 million, for instance. As the year thus progresses, small-cap stocks and the Russell 2000 Index manage to gain more investor confidence and hence have more money poured into them.

Investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Russell 2000 Stocks with High Dividend Yields

10. Capstead Mortgage Corporation (NYSE: CMO)
Number of Hedge Fund Holders: 8 Dividend Yield: 9.1%

Capstead Mortgage Corporation (NYSE: CMO), a US-based REIT, invests in residential mortgage pass-through securities. The company ranks 10th on our list of Russell 2000 stocks with high dividend yields and is headquartered in Dallas, Texas.

This July, Capstead Mortgage Corporation (NYSE: CMO) entered into a merger agreement with Benefit Street Partners Realty Trust, offering stockholders a cash payment of 15.75% premium to Capstead Mortgage Corporation (NYSE: CMO) diluted BV/share before the two companies become merged into the new Franklin BSP Realty Trust. The new merged company is set to become the fourth-largest commercial mortgage REIT, as it will have about $2 billion of pro forma equity common stock trading on the New York Stock Exchange.

In the second quarter of 2021, Capstead Mortgage Corporation (NYSE: CMO) had an FFO of $0.09, missing estimates by $0.06. The company’s revenue was $16.06 million, also missing estimates by $9.74 million. Capstead Mortgage Corporation (NYSE: CMO) has also gained 11.11% in the past 6 months and 14.29% year to date.

By the end of the first quarter of 2021, 8 hedge funds out of the 866 tracked by Insider Monkey held stakes in Capstead Mortgage Corporation (NYSE: CMO) worth roughly $52.2 million. This is compared to 14 hedge funds in the previous quarter with a total stake value of approximately $54.6 million.

9. Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI)
Number of Hedge Fund Holders: 11 Dividend Yield: 9.3%

Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) is another REIT, and originates, acquires, invests in, and manages commercial first mortgage loans, subordinate financings and a range of other commercial real-estate debt investments. The company ranks 9th on our list of Russell 2000 stocks with high dividend yields and operates primarily in the US.

Timothy Hayes, an analyst at BTIG, began covering stocks of Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) this February. The analyst holds a Neutral rating on the shares.

In the second quarter of 2021, Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) had an FFO of $0.27, missing estimates by $0.09. The company’s revenue was $74.48 million, up 5.27% year over year and beat estimates by $5.17 million. Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) has also gained 20.72% in the past 6 months and 42.28% year to date.

By the end of the first quarter of 2021, 11 hedge funds out of the 866 tracked by Insider Monkey held stakes in Apollo Commercial Real Estate Finance, Inc. (NYSE: ARI) worth roughly $44.2 million. This is compared to 18 hedge funds in the previous quarter with a total stake value of approximately $48.4 million.

8. New York Mortgage Trust, Inc. (NASDAQ: NYMT)
Number of Hedge Fund Holders: 12 Dividend Yield: 9.4%

New York Mortgage Trust, Inc. (NASDAQ: NYMT) works to acquire, invest in, finance, and manage mortgage-related single-family and multi-family residential assets mainly in the US. the company ranks 8th on our list of Russell 2000 stocks with high dividend yields.

As of this May, B. Riley analyst Matt Howlett holds a Buy rating on shares of New York Mortgage Trust, Inc. (NASDAQ: NYMT). The analyst also set a $6 price target on the stock, commenting that New York Mortgage Trust, Inc. (NASDAQ: NYMT) has a 40% potential total return profile on the basis of his dividend forecast and expected price appreciation.

In the second quarter of 2021, New York Mortgage Trust, Inc. (NASDAQ: NYMT) had an FFO of $0.11, in line with estimates. The company’s revenue was $31.48 million, up 10.34% year over year and beat the previous quarter's revenue of $30.34 million. New York Mortgage Trust, Inc. (NASDAQ: NYMT) has also gained 8.21% in the past 6 months and 20.83% year to date.

By the end of the first quarter of 2021, 12 hedge funds out of the 866 tracked by Insider Monkey held stakes in New York Mortgage Trust, Inc. (NASDAQ: NYMT) worth roughly $29.1 million. This is compared to 19 hedge funds in the previous quarter with a total stake value of approximately $35.6 million.

7. Invesco Mortgage Capital Inc. (NYSE: IVR)
Number of Hedge Fund Holders: 14 Dividend Yield: 9.6%

Invesco Mortgage Capital Inc. (NYSE: IVR), an REIT specializing in investing in, financing, and managing mortgage-backed securities (MBS) and other assets related to the area, is next on our list of Russell 2000 stocks with high dividend yields. The company ranks 7th and is based in Atlanta, Georgia.

Eric Hagen, an analyst at BTIG, is covering shares of Invesco Mortgage Capital Inc. (NYSE: IVR) with a Neutral rating.

In the second quarter of 2021, Invesco Mortgage Capital Inc. (NYSE: IVR) had an FFO of $0.10, beating estimates by $0.01. The company’s revenue was $46.33 million, up 55.83% year over year and also beating estimates by $4.27 million.

By the end of the first quarter of 2021, 14 hedge funds out of the 866 tracked by Insider Monkey held stakes in Invesco Mortgage Capital Inc. (NYSE: IVR) worth roughly $57.7 million. This is compared to 12 hedge funds in the previous quarter with a total stake value of approximately $30.9 million.

6. PennyMac Mortgage Investment Trust (NYSE: PMT)
Number of Hedge Fund Holders: 8 Dividend Yield: 9.9%

PennyMac Mortgage Investment Trust (NYSE: PMT) is a specialty finance company investing in mortgage-related assets in the US. The company ranks 6th on our list of Russell 2000 stocks with high dividend yields and operates through its Credit Sensitive Strategies, Interest Rate Sensitive Strategies, and Correspondent Production segments.

This June, Mark DeVries, an analyst at Barclays, raised his price target on shares of PennyMac Mortgage Investment Trust (NYSE: PMT). The new price target on the stock is $19, with DeVries also reiterating an Equal Weight rating on the shares.

In the second quarter of 2021, PennyMac Mortgage Investment Trust (NYSE: PMT) had an FFO of $0.32, missing estimates by $0.27. The company’s revenue was $121.57 million, also missing estimates by $49.98 million. PennyMac Mortgage Investment Trust (NYSE: PMT) has however gained 1.35% in the past 6 months and 10.20% year to date.

By the end of the first quarter of 2021, 8 hedge funds out of the 866 tracked by Insider Monkey held stakes in PennyMac Mortgage Investment Trust (NYSE: PMT) worth roughly $15.7 million. This is compared to 15 hedge funds in the previous quarter with a total stake value of approximately $71.8 million.

5. Sculptor Capital Management, Inc. (NYSE: SCU)
Number of Hedge Fund Holders: 17 Dividend Yield: 10.4%

Sculptor Capital Management, Inc. (NYSE: SCU), a publicly-owned hedge fund sponsor, ranks 5th on our list of Russell 2000 stocks with high dividend yields. The company offers investment advisory services to institutional investors, corporations, and other clients.

This July, Citigroup’s William Katz raised his price target on shares of Sculptor Capital Management, Inc. (NYSE: SCU) from $46.50 to $48.50. Katz also holds a Buy rating on the stock.

In the second quarter of 2021, Sculptor Capital Management, Inc. (NYSE: SCU) had an EPS of $1.12, beating estimates by $0.67. The company’s revenue was $132.23 million, up 36.17% year over year and also beating estimates by $42.79 million. Sculptor Capital Management, Inc. (NYSE: SCU) has also gained 34.46% in the past 6 months and 71.90% year to date.

By the end of the first quarter of 2021, 17 hedge funds out of the 866 tracked by Insider Monkey held stakes in Sculptor Capital Management, Inc. (NYSE: SCU) worth roughly $90.5 million. This is compared to 17 hedge funds in the previous quarter with a total stake value of approximately $73.3 million.

4. Two Harbors Investment Corp. (NYSE: TWO)
Number of Hedge Fund Holders: 32 Dividend Yield: 10.8%

Two Harbors Investment Corp. (NYSE: TWO) is yet another real estate investment trust on our list of Russell 2000 stocks with high dividend yields, and ranks 4th. The company invests in, finances, and manages residential mortgage-backed securities (RMBS), alongside non-agency securities, mortgage servicing rights, and a range of other assets in the US.

Credit Suisse analyst Douglas Harter holds a Neutral rating on shares of Two Harbors Investment Corp. (NYSE: TWO) as of this June. The analyst also set a $7.50 price target on the stock.

In the second quarter of 2021, Two Harbors Investment Corp. (NYSE: TWO) had an FFO of $0.19, in line with estimates. The company’s revenue was $19.04 million, but missing estimates by $24.47 million. Two Harbors Investment Corp. (NYSE: TWO) has also gained 4.05% year to date and 15.44% in the past year.

By the end of the first quarter of 2021, 32 hedge funds out of the 866 tracked by Insider Monkey held stakes in Two Harbors Investment Corp. (NYSE: TWO) worth roughly $200 million. This is compared to 18 hedge funds in the previous quarter with a total stake value of approximately $58.1 million.

3. ARMOUR Residential REIT, Inc. (NYSE: ARR)
Number of Hedge Fund Holders: 9 Dividend Yield: 11.5%

ARMOUR Residential REIT, Inc. (NYSE: ARR), a real estates investment trust investing in residential mortgage-backed securities (RMBS) ranks 3rd on our list of Russell 2000 stocks with high dividend yields. The company is based in Florida, US.

Ladenburg’s Christopher Nolan and B. Riley’s Matt Howlett both have Neutral ratings on ARMOUR Residential REIT, Inc. (NYSE: ARR). B. Riley’s rating came alongside an $11.50 price target this July as well.

In the second quarter of 2021, ARMOUR Residential REIT, Inc. (NYSE: ARR) had an FFO of $0.21, missing estimates by $0.07. The company’s revenue was $16.7 million, higher than the previous quarter’s revenue of $16.06 million. ARMOUR Residential REIT, Inc. (NYSE: ARR) has also gained 9.5% in the past year.

By the end of the first quarter of 2021, 9 hedge funds out of the 866 tracked by Insider Monkey held stakes in ARMOUR Residential REIT, Inc. (NYSE: ARR) worth roughly $22.2 million. This is compared to 13 hedge funds in the previous quarter with a total stake value of approximately $23.5 million.

2. Nordic American Tankers Limited (NYSE: NAT)
Number of Hedge Fund Holders: 10 Dividend Yield: 11.9%

Nordic American Tankers Limited (NYSE: NAT) is a tanker company operating to acquire and charter double-hull tankers in Bermuda and across the globe. The company ranks 2nd on our list of Russell 2000 stocks with high dividend yields and is based in Bermuda.

Evercore ISI analyst Jonathan Chappell just this May upgraded shares of Nordic American Tankers Limited (NYSE: NAT) from Underperform to In Line. The analyst also raised his price target on Nordic American Tankers Limited (NYSE: NAT) from $2.50 to $4.

In the first quarter of 2021, Nordic American Tankers Limited (NYSE: NAT) had an EPS of -$0.16, beating estimates by $0.02. The company’s revenue was $18.81 million, beating the previous quarter’s revenue of $16.29 million.

By the end of the first quarter of 2021, 10 hedge funds out of the 866 tracked by Insider Monkey held stakes in Nordic American Tankers Limited (NYSE: NAT) worth roughly $7.11 million. This is compared to 5 hedge funds in the previous quarter with a total stake value of approximately $7.6 million.

1. Orchid Island Capital, Inc. (NYSE: ORC)
Number of Hedge Fund Holders: 8 Dividend Yield: 16.3%

Orchid Island Capital, Inc. (NYSE: ORC), is another specialty finance company on our list of Russell 2000 stocks with high dividend yields, ranking 1st. The company is based in Florida and works to invest in residential mortgage-backed securities (RMBS).

Ladenburg holds a Buy rating on shares of Orchid Island Capital, Inc. (NYSE: ORC).

In the second quarter of 2021, Orchid Island Capital, Inc. (NYSE: ORC) had an FFO of $0.24, missing estimates by $0.03. The company’s revenue was $27.70 million, up 21.59% year over year and beating estimates by $1.41 million.

By the end of the first quarter of 2021, 8 hedge funds out of the 866 tracked by Insider Monkey held stakes in Orchid Island Capital, Inc. (NYSE: ORC) worth roughly $19.9 million. This is compared to 10 hedge funds in the previous quarter with a total stake value of approximately $14.8 million.



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