Do hedge funds like American Electric Power Company, Inc. (AEP)?
Insider Monkey has processed numerous 13F deposits from successful hedge funds and value investors to create a comprehensive database of hedge fund holdings. The 13F documents show the positions of performing hedge funds and investors at the end of the fourth quarter. You can find articles on individual hedge fund transactions on many financial news websites. However, in this article, we’ll take a look at their collective moves over the past 6 years and analyze what American Electric Power Company, Inc.’s smart money thinks (NASDAQ:AEP) on the basis of this data.
Interest of hedge funds in American Electric Power Company, Inc. (NASDAQ:AEP) shares was stable at the end of the last quarter. This is usually a negative indicator. Our calculations also showed that AEP is not one of the 30 most popular stocks among hedge funds (click for Q1 ranking). The level and evolution of the popularity of hedge funds are not the only variables to analyze in deciphering the outlook for hedge funds. A stock may experience an increase in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we’ll be looking at companies like National Grid plc (NYSE:NGG), Roku, Inc. (NASDAQ:ROKU) and IDEXX Laboratories, Inc. (NASDAQ:IDXX) to collect more data points.
So why do we pay attention to hedge fund sentiment before making investment decisions? Our research has shown that small-cap hedge fund stock selection managed to beat the market by double digits every year between 1999 and 2016, but the margin for outperformance has shrunk in recent years. Nonetheless, we were still able to identify in advance a select group of hedge funds that have outperformed S&P 500 ETFs by more than 115 percentage points since March 2017 (see details here). We have been able to outperform passive index funds by following the movements of corporate and hedge fund insiders, and we believe small investors can benefit greatly from reading hedge fund investor letters and 13F records.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey, we scour multiple sources to uncover the next big investing idea. For example, lithium mining is one of the fastest growing industries right now, so we’re looking at stock locations like this. emerging lithium stocks. We go through lists like the 10 best EV stocks to choose the next Tesla which will offer a 10x return. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to market arguments at hedge fund conferences. You can subscribe to our free daily newsletter at our home page. Now let’s take a look at the new hedge fund action on American Electric Power Company, Inc. (NASDAQ:AEP).
Do hedge funds think AEP is a good stock to buy now?
At the end of the first quarter, 32 of the hedge funds tracked by Insider Monkey were long in this stock, a change of 0% from the previous quarter. By comparison, 38 hedge funds held bullish stocks or call options in the AEP a year ago. With the whirlwind of smart money sentiment, there is a select group of outstanding hedge fund managers who were drastically increasing their stakes (or already racking up large positions).
Specifically, Millennium Management was the largest shareholder in American Electric Power Company, Inc. (NASDAQ: AEP), with a stake valued at $ 259.6 million reported at the end of March. Following Millennium Management was Citadel Investment Group, which amassed a stake valued at $ 169.3 million. Renaissance Technologies, ExodusPoint Capital and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders in the company. In terms of portfolio weights assigned to each position Capital Coann assigned the greatest weight to American Electric Power Company, Inc. (NASDAQ: AEP), approximately 9.12% of its 13F portfolio. Management of scientific dissemination is also relatively very bullish on the stock, designating 0.76% of its 13F equity portfolio to AEP.
Due to the fact that American Electric Power Company, Inc. (NASDAQ: AEP) faced a drop in interest from all of the hedge funds we track, it’s easy to see that there have been a few managers. funds that completely sold their positions in the last quarter. . At the top of the pile, Daniel S. Och’s Ozone management cut the largest stake from the “top crust” of funds monitored by Insider Monkey, valued at about $ 5.5 million in stocks. the Bernard Lambilliotte fund, Ecofin SA, also emptied its shares, worth around $ 4 million. These bearish behaviors are interesting, because the overall interest of hedge funds has remained the same (this is a bearish signal in our experience).
Now let’s review hedge fund activity in other stocks similar to American Electric Power Company, Inc. (NASDAQ: AEP). These stocks are National Grid plc (NYSE:NGG), Roku, Inc. (NASDAQ:ROKU), IDEXX Laboratories, Inc. (NASDAQ:IDXX), Microchip Technology Incorporated (NASDAQ:MCHP), Manulife Financial Corporation (NYSE:MFC), eBay Inc (NASDAQ:EBAY) and L3Harris Technologies, Inc. (NYSE:LHX). The market values of this group of shares are closest to the market value of AEP.
[table] Ticker, number of HF with positions, total value of HF positions (x1000), change of position HF NGG, 9.331590.4 ROKU, 63.3781353.3 IDXX, 49.2851712.3 MCHP, 42.962773, -3 MFC, 17,190066, -3 EBAY, 51,3762465, -2 LHX, 41,1398723,4 Medium, 38,9,1896955,0,9 [/table]
See the table here if you have formatting problems.
As you can see, these stocks had an average of 38.9 hedge funds with bullish positions and the average amount invested in these stocks was $ 1897 million. This figure was $ 809 million in the case of AEP. Roku, Inc. (NASDAQ:ROKU) is the most popular action in this table. On the other hand, National Grid plc (NYSE:NGG) is the least popular with only 9 bullish hedge fund positions. American Electric Power Company, Inc. (NASDAQ: AEP) isn’t the least popular stock in this group, but hedge fund interest is still below average. Our overall hedge fund sentiment score for AEP is 51.6. Stocks with a higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we prefer to spend our time researching the stocks that hedge funds are accumulating on. Our calculations have shown 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 22.8% in 2021 through July 2 and again topped the market by 6 percentage points. Unfortunately, the AEP was not as popular as these 5 stocks (hedge fund sentiment was rather bearish); AEP investors were disappointed as the stock has returned 1.4% since the end of March (through 7/2) and has underperformed the market. If you want to invest in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds, as most of these stocks have already outperformed the market in 2021.
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Disclosure: none. This article originally appeared on Monkey initiate.