Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the third quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards The Southern Company (NYSE:SO) to find out whether it was one of their high conviction long-term ideas.
Is The Southern Company (NYSE:SO) worth your attention right now? Investors who are in the know are becoming less confident. The number of long hedge fund positions were cut by 2 in recent months. SO was in 17 hedge funds’ portfolios at the end of September. There were 19 hedge funds in our database with SO positions at the end of the previous quarter. At the end of this article we will also compare SO to other stocks, including Carnival Corporation (NYSE:CCL), Itau Unibanco Holding SA (ADR) (NYSE:ITUB), and EOG Resources Inc (NYSE:EOG) to get a better sense of its popularity.
Today there are numerous metrics market participants employ to size up stocks. A couple of the less utilized metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best investment managers can outperform the market by a solid amount (see the details here).
Now, let’s take a gander at the key action encompassing The Southern Company (NYSE:SO).
Hedge fund activity in The Southern Company (NYSE:SO)
Heading into Q4, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a reduction of 11% from the second quarter. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jim Simons’s Renaissance Technologies has the largest position in The Southern Company (NYSE:SO), worth close to $86.1 million, accounting for 0.2% of its total 13F portfolio. On Renaissance Technologies’s heels is AQR Capital Management, managed by Cliff Asness, which holds a $57.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers that are bullish encompass D. E. Shaw’s D E Shaw, Michael Messner’s Seminole Capital (Investment Mgmt) and Matthew Hulsizer’s PEAK6 Capital Management.