Ameren Corp (NYSE:AEE) investors should be aware of a decrease in activity from the world's largest hedge funds of late.
In the eyes of most traders, hedge funds are assumed to be worthless, outdated financial vehicles of the past. While there are more than 8000 funds trading at present, we at Insider Monkey hone in on the bigwigs of this club, around 450 funds. Most estimates calculate that this group controls most of all hedge funds' total capital, and by paying attention to their best picks, we have spotted a number of investment strategies that have historically outstripped the market. 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 outpaced the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Just as beneficial, positive insider trading sentiment is a second way to break down the stock market universe. Just as you'd expect, there are lots of stimuli for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the useful potential of this tactic if investors know what to do (learn more here).
Now, let's take a peek at the recent action encompassing Ameren Corp (NYSE:AEE).
At year's end, a total of 21 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes meaningfully.
According to our comprehensive database, Israel Englander's Millennium Management had the most valuable position in Ameren Corp (NYSE:AEE), worth close to $54 million, accounting for 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is David Harding of Winton Capital Management, with a $30 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Cliff Asness's AQR Capital Management, Charles Clough's Clough Capital Partners and Phill Gross and Robert Atchinson's Adage Capital Management.
Because Ameren Corp (NYSE:AEE) has witnessed declining sentiment from the smart money, we can see that there is a sect of hedge funds who were dropping their entire stakes heading into 2013. Intriguingly, John Fichthorn's Dialectic Capital Management cut the biggest investment of the "upper crust" of funds we track, comprising about $9 million in stock.. Andrew R. Midler's fund, Savitr Capital, also cut its stock, about $3 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity, especially when it's bullish, is best served when the company in focus has experienced transactions within the past 180 days. Over the latest six-month time frame, Ameren Corp (NYSE:AEE) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
With the returns demonstrated by the aforementioned tactics, everyday investors should always pay attention to hedge fund and insider trading sentiment, and Ameren Corp (NYSE:AEE) is no exception.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.