Xcel Energy Inc (NYSE:XEL) investors should be aware of a decrease in hedge fund interest lately.
In the eyes of most investors, hedge funds are viewed as worthless, old investment tools of the past. While there are over 8000 funds in operation at present, we at Insider Monkey hone in on the masters of this club, around 450 funds. It is estimated that this group oversees the lion’s share of the hedge fund industry’s total capital, and by watching their highest performing stock picks, we have come up with a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Equally as important, bullish insider trading sentiment is a second way to break down the financial markets. Obviously, there are a number of reasons for an upper level exec to drop shares of his or her company, but just one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the valuable potential of this strategy if investors understand what to do (learn more here).
Keeping this in mind, we’re going to take a glance at the recent action encompassing Xcel Energy Inc (NYSE:XEL).
What have hedge funds been doing with Xcel Energy Inc (NYSE:XEL)?
Heading into 2013, a total of 12 of the hedge funds we track were long in this stock, a change of -33% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings considerably.
When looking at the hedgies we track, Israel Englander’s Millennium Management had the biggest position in Xcel Energy Inc (NYSE:XEL), worth close to $40.7 million, comprising 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Winton Capital Management, managed by David Harding, which held a $22.9 million position; 0.6% of its 13F portfolio is allocated to the company. Some other hedge funds that are bullish include Phill Gross and Robert Atchinson’s Adage Capital Management, Cliff Asness’s AQR Capital Management and John A. Levin’s Levin Capital Strategies.
Because Xcel Energy Inc (NYSE:XEL) has faced bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of funds who sold off their positions entirely at the end of the year. At the top of the heap, Louis Navellier’s Navellier & Associates sold off the largest position of the “upper crust” of funds we key on, totaling close to $38.8 million in stock., and Tim Flannery of Copia Capital was right behind this move, as the fund sold off about $3.1 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 6 funds at the end of the year.
What do corporate executives and insiders think about Xcel Energy Inc (NYSE:XEL)?
Bullish insider trading is at its handiest when the company in focus has seen transactions within the past 180 days. Over the last half-year time period, Xcel Energy Inc (NYSE:XEL) has seen 3 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Xcel Energy Inc (NYSE:XEL). These stocks are FirstEnergy Corp. (NYSE:FE), Korea Electric Power Corporation (ADR) (NYSE:KEP), Edison International (NYSE:EIX), Huaneng Power International Inc (ADR) (NYSE:HNP), and Empresa Nacional de Electricidad (ADR) (NYSE:EOC). This group of stocks are in the electric utilities industry and their market caps resemble XEL’s market cap.