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Hedge Funds Are Dumping Companhia Energetica Minas Gerais (ADR) (CIG)

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Is Companhia Energetica Minas Gerais (ADR) (NYSE:CIG) a good investment?

If you were to ask many traders, hedge funds are perceived as bloated, outdated investment vehicles of a forgotten age. Although there are In excess of 8,000 hedge funds with their doors open currently, Insider Monkey looks at the leaders of this club, close to 525 funds. It is widely held that this group oversees most of the smart money’s total assets, and by paying attention to their highest performing stock picks, we’ve unearthed a number of investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we‘ve began to 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 (find a sample of our picks).

Equally as key, bullish insider trading sentiment is a second way to analyze the marketplace. There are a variety of reasons for an upper level exec to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this tactic if investors understand what to do (learn more here).

Companhia Energetica Minas Gerais (ADR) (NYSE:CIG)

Now that that’s out of the way, let’s discuss the latest info for Companhia Energetica Minas Gerais (ADR) (NYSE:CIG).

What does the smart money think about Companhia Energetica Minas Gerais (ADR) (NYSE:CIG)?

Heading into Q3, a total of 8 of the hedge funds we track held long positions in this stock, a change of -20% from the first quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully.

When using filings from the hedgies we track, Cliff Asness’s AQR Capital Management had the most valuable position in Companhia Energetica Minas Gerais (ADR) (NYSE:CIG), worth close to $12.4 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Ken Griffin of Citadel Investment Group, with a $5.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions include John Overdeck and David Siegel’s Two Sigma Advisors, Mike Vranos’s Ellington and Matthew Hulsizer’s PEAK6 Capital Management.

Since Companhia Energetica Minas Gerais (ADR) (NYSE:CIG) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of hedgies that slashed their full holdings in Q1. Intriguingly, Rob Citrone’s Discovery Capital Management dumped the biggest stake of the 450+ funds we key on, comprising an estimated $21.5 million in stock. Howard Marks’s fund, Oaktree Capital Management, also dropped its stock, about $3.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds in Q1.

Insider trading activity in Companhia Energetica Minas Gerais (ADR) (NYSE:CIG)

Legal insider trading, particularly when it’s bullish, is best served when the company in question has experienced transactions within the past six months. Over the last half-year time frame, Companhia Energetica Minas Gerais (ADR) (NYSE:CIG) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Companhia Energetica Minas Gerais (ADR) (NYSE:CIG). These stocks are DTE Energy Co (NYSE:DTE), Entergy Corporation (NYSE:ETR), The AES Corporation (NYSE:AES), Calpine Corporation (NYSE:CPN), and Wisconsin Energy Corporation (NYSE:WEC). All of these stocks are in the electric utilities industry and their market caps are similar to CIG’s market cap.

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