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Do Hedge Funds and Insiders Love El Paso Electric Company (EE)?: UIL Holdings Corporation (UIL), Black Hills Corp (BKH)

Is El Paso Electric Company (NYSE:EE) a bargain? The smart money is becoming hopeful. The number of bullish hedge fund bets went up by 5 recently.

El Paso Electric Company (NYSE:EE)In the 21st century investor’s toolkit, there are dozens of gauges market participants can use to watch publicly traded companies. A pair of the best are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite fund managers can outclass the broader indices by a superb margin (see just how much).

Just as beneficial, positive insider trading sentiment is a second way to parse down the world of equities. Obviously, there are plenty of incentives for an executive to sell shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the valuable potential of this method if shareholders understand what to do (learn more here).

With all of this in mind, we’re going to take a peek at the key action surrounding El Paso Electric Company (NYSE:EE).

Hedge fund activity in El Paso Electric Company (NYSE:EE)

At the end of the fourth quarter, a total of 12 of the hedge funds we track were bullish in this stock, a change of 71% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably.

Of the funds we track, GAMCO Investors, managed by Mario Gabelli, holds the biggest position in El Paso Electric Company (NYSE:EE). GAMCO Investors has a $60 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $38 million position; 0% of its 13F portfolio is allocated to the company. Some other hedgies that are bullish include Cliff Asness’s AQR Capital Management, D. E. Shaw’s D E Shaw and Clint Carlson’s Carlson Capital.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Carlson Capital, managed by Clint Carlson, initiated the largest position in El Paso Electric Company (NYSE:EE). Carlson Capital had 2 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also made a $1 million investment in the stock during the quarter. The other funds with brand new EE positions are Mike Vranos’s Ellington, Israel Englander’s Millennium Management, and David Costen Haley’s HBK Investments.

How are insiders trading El Paso Electric Company (NYSE:EE)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company in focus has seen transactions within the past half-year. Over the last half-year time period, El Paso Electric Company (NYSE:EE) has experienced 1 unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to El Paso Electric Company (NYSE:EE). These stocks are UIL Holdings Corporation (NYSE:UIL), Black Hills Corp (NYSE:BKH), Ormat Technologies, Inc. (NYSE:ORA), The Empire District Electric Company (NYSE:EDE), and Atlantic Power Corp (NYSE:AT). This group of stocks are in the electric utilities industry and their market caps are closest to EE’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
UIL Holdings Corporation (NYSE:UIL) 8 2 2
Black Hills Corp (NYSE:BKH) 7 0 0
Ormat Technologies, Inc. (NYSE:ORA) 7 0 0
The Empire District Electric Company (NYSE:EDE) 4 0 1
Atlantic Power Corp (NYSE:AT) 2 3 0

With the returns shown by the aforementioned time-tested strategies, everyday investors should always keep an eye on hedge fund and insider trading activity, and El Paso Electric Company (NYSE:EE) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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